Jeremiah Smith, PhD
Sep 5, 2018 · 2 min read

Thanks for the response David Feldman

The answer is: nothing! At the technical level at least. By nature, digital information is infinitely reproducible at virtually 0 cost.

But… it might be illegal. Depending on the marketplace, or more precisely the licensing agreement the buyer and seller have entered in for a given data transaction, it might be perfectly fine to do what you describe or totally illegal.

The real question is: if it’s technically possible to buy data, duplicate it for free and sell multiple copies to other buyers—at a price lower than the original purchase price and still make a profit— how are data marketplaces ever going to work?

It comes down to the resell method would-be resellers might consider for such a scheme. They could either try to find data buyers on the same (or another) data marketplace or resell the data “over-the-counter” (OTC) i.e. make ad hoc deals with a given set of buyer they would somehow find outside a standard place of exchange.

Data marketplaces themselves need to have explicit or implicit mechanism to prevent this type of behavior or else they won’t attract non-malicious data sellers. One popular way to minimize bad behavior are reputation systems, the right approach will depend on the data marketplace whether or not it is decentalized.

If an OTC method is envisaged, then the problem becomes more of an economic issue in case the reselling is illegal. It is a similar situation to how films can be illegally downloaded via torrent. To date, the most successful way to mitigate this type of piracy is to create the right incentive to use the legal method, in our case, buy the data from the original seller instead of an OTC pirate version. Going back to the example of video content, convenient, affordable video streaming seems to be a good response and has been brilliantly implemented by Netflix for instance (Netflix’s market cap is over $140 billion at the time of writing). So if data marketplaces have the right value proposition—say, legal access to the freshest data through a convenient interface at a reasonable price—there shouldn’t be too much incentive to start a data black market.

In short, there is no other way than for data marketplaces to provide a higher value proposition than illegally buying data OTC to counter this type of behavior. In practice, this will probably be easier than it sounds as large data buyers (think corporations) won’t want to do anything illegal.

Re: could blockchain technology prevent piracy? Not 100%, but it can help align the incentives of buyers and sellers to make piracy an unattractive solution.

Thanks for asking this AWESOME question, let me know if anything is unclear!

Jeremiah Smith, PhD

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Founder @ StartupTracker.io ✨🔨