Business Models Ralph Rayner IOOS Advisory Committee, April 2014

My Background 35 years in commercial meteorological and oceanographic product and service provision Extensive engagement with oceanographic research (eg LSE, PML, NOC etc) Extensive involvement with professional bodies and learned societies Wide ranging experience of stakeholder engagement (OI, CTNW, IOOS workshops etc) Have worked with IOOS almost since inception

Some basic principles Delivering Benefits to stakeholders The meteorological analogue A business model for IOOS? Some basic principles Delivering Benefits to stakeholders The meteorological analogue A business model for IOOS?

Public Investment Why should the tax payer invest in IOOS? Support to important scientific research Public good –Safety of life and property –Protection of the environment –Defense/security Impact on wealth creation and employment

Public Data Rights Two possible extremes of policy –Public own the rights to tax funded information and have ‘free’ access including for secondary commercial use –Publicly funded bodies should ‘profit’ directly from secondary use of tax funded information - subsequent commercial exploitation beyond initial public objective should directly reduce need for public funding to meet public good needs

A Battle of Ideologies US policy is clear (at the moment) Elsewhere, and especially in Europe, there has been (and still is) a battle between these two extremes of policy with many public bodies viewing themselves as ‘businesses’ selling IP commercially to bolster their public funding and seeking to restrict access to this IP

Some Consequences US has developed much stronger and more diverse secondary commercial use market (esp in meteorology) US product and service innovation generally greater and more closely matched to specific customer needs

TAX Public good objective Creation of data for intended public good objectives Use as basis for income generation by public body holding the data Freely available for public use inc commercial exploitation Public/private partnership In Summary

Public/Private Partnerships Hybrid between two policy extremes –Can be an effective way to generate commercial activity –Creates funds flow to public bodies reducing direct burden on tax payers (but comingling issues in the US) Issue of preferential arrangements –level playing field (eg CRADAs) Can lead to some complex IP and legal problems given nature of required partnerships

Which Way? Leaving aside international data exchange dimension (WMO-40 type model) only basis for a decision is weighing up the benefits (wealth creation, employment) Much greater benefits from open access Europe belatedly generally heading in same direction as US (Inspire Directive, Copernicus, Sentinel etc) but still a long way to go

How Does This Impact IOOS? Federal IOOS activities have to be within present legal framework RAs have a range of governance models some of which would permit them to become commercial providers and/or to create public/private and other partnership structures

Some basic principles Delivering Benefits to stakeholders The meteorological analogue A business model for IOOS? Some basic principles Delivering Benefits to stakeholders The meteorological analogue A business model for IOOS?

End-Users Understanding the value of the benefits they derive from IOOS data and information flows is challenging

Providers of IOOS components

Intermediate users

Some basic principles Delivering Benefits to stakeholders The meteorological analogue A business model for IOOS? Some basic principles Delivering Benefits to stakeholders The meteorological analogue A business model for IOOS?

The Meteorological Service Industry Variously valued at around $3B/annum In the US and $6B/annum globally (with much larger values for derived products, eg weather risk products ~ $8B/annum Corresponding value in Europe much smaller (in range Euro 300M/annum to Euro 400M/annum) In large part, this is because of the impact of different data policies either side of the Atlantic Meteorological provider industry more difficult to value but globally is in $10sB/annum? (esp if satellites included)

U.S. Market for Private Weather Services

Some basic principles Delivering Benefits to stakeholders The meteorological analogue A business model for IOOS? Some basic principles Delivering Benefits to stakeholders The meteorological analogue A business model for IOOS?

Can IOOS follow a similar model? $10bn/yr for providers and intermediaries? £1.5 bn and growing for UK from latest AMSI survey Do not know the answer for the US, but will be starting to find out via the IOOS Industry Study Some emerging market opportunities (esp in shipping, aquaculture + wild card of seabed mining)

Helping to build the market Foster relationships with existing providers and intermediate users and help create new ones Broker connections with venture capital, business angels etc to support taking good new ideas to market (IOOS spin-out companies etc) Find business models that support IOOS in cash, in kind or in advocacy (Joint ventures, JIP’s, shared IPR models etc)

Partnerships Partnerships represent a key part of the way forward 1+1=3 Put US knowledge alongside US business skills and proximity to customers in a global market Succeed and will have a vibrant and demonstrably successful industry sector and support for a properly funded IOOS

How will this benefit IOOS? Demonstrates that public investment in IOOS stimulates business activity creating export and employment growth Helps to connect IOOS more closely to intermediate service providers who deliver custom information products to many different end-user markets This in turn better connects IOOS to the needs of end-users UNDERPINS THE CASE FOR INVESTMENT IN IOOS AS A VITAL PUBLIC GOOD

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