There has been some speculation that Freebase is a vehicle for Metaweb to prosper from its semantic web infrastructure when used for commercial purposes. As I recall, Metaweb raised over $40 million in Series B around the time they started building Freebase. The investment was led by Goldman Sachs. Metaweb’s seasoned investors were unlikely to invest so much in a business that cannot project a return on that investment. Almost certainly, Metaweb has firm plans for realizing over $100 million in revenues. Most likely, for these investors and the amount of capital, target revenues by 2014, five years after the second round, would be in the vicinity of $1 billion. Obviously, there is a lot of work to get there from around zero today.
Some of the bubble in raising those funds has burst. The economy would crimp the valuation and investment if made today. And the semantic web has yet to produce a winner, so with less enthusiasm, the investment would again be less favorable today. All this is modulo the business plan. If the business plan withstands scrutiny and the rate of return from credibly achievable projections justifies investment, they could get the money again, even now. But no one that I have heard or read over the past few years can explain the business plan adequately – that is, concretely. I would appreciate any insights or opinions on the topic. I believe these are smart people, in the company and among its investors, so I am sure it is there. I just don’t believe in the “we’ll figure out how to make money eventually” business plan in this case.
Some Freebase terms that are worth knowing but are commercially reasonable for any site that provides a free service include:
- The terms of service are subject to change (upon posting).
- The service may be changed or discontinued at any time and without notice.
- Limits concerning access to or use of the services may be established.
- Any disputes shall be heard in San Francisco and governed by California law.
Such terms would stop me from basing a business on Freebase without a written agreement with Metaweb. Other Freebase terms are interesting, and potentially controversial:
- Advertising is explicitly permitted.
- Content contributed may not be stored or displayed and may be deleted.
- Users and content providers indemnify Metaweb against any claims arising out of use.
I have not noticed any advertising on Freebase, but it is permitted. I really don’t care if there is advertising. My concern would be more with the utility of the site and service, especially the API. Others certainly feel otherwise, however. Of course, advertising interacts with privacy, which concerns me, but perhaps not enough to preclude my doing business with Metaweb.
Indemnifying Metaweb rather than simply holding them harmless is a over the top. Indemnification might make more sense for content contributors, but this policy applies even to users who do not contribute content.
Failing to store content that is in conformance with all terms of the agreements is not a necessary component of a free service. This effectively precludes Freebase from providing a free RDF store, as Google and so many others do for limited amounts of data, whether files or email, for example. I don’t fault this policy but it seems somewhat arbitrary and perhaps misguided (versus limitations on the volume of conforming content that is not displayed that will be stored). Such a limitation probably interferes with some applications that would otherwise be developed using Freebase.
The following terms, aside from the possibility of advertising, may give some visibility to monetization:
- Registration, including an email address and “limited information about yourself” may be required.
- Volume is currently limited to 100,000 API calls per day.
- Is the API the primary monetization vehicle?
- The API may be used only “as outlined in the documentation… on the site”.
Starting from the data, and with its social aspects, Freebase is headed for the intersection of Facebook and Wikipedia. Commercial incentive and social gravity will propel Freebase content far beyond its foundation in Wikipedia attribution. And the attraction of social content and data will concretely and economically motivate the Freebase community to grow beyond “meaningless” Facebook. Will every student need a Freebase account?
I believe Freebase can get there and that the advertising network revenues and downstream user access channels will be phenomenal. Imagine the questions that will be answer-able using Freebase data. Metaweb is probably rubbing hands together as Wolfram, IBM, Vulcan and others work on question answering. Or maybe they are working on it, too, with some of that $42.5 million….
If Freebase introduces a True Knowledge or a better Bing/Powerset, Google will not want to link to Freebase unless (for example) Freebase uses Google’s DoubleClick advertising network. There is either an acquisition, deep collaboration, or a war looming as Freebase builds momentum and moves into search and question answering, if not simply query (once the user authored content is several times Wikipedia).
Google could be in trouble… It’s probably too late (or too embarrassing?) to follow Metaweb’s lead. And if so, Freebase is worth a great deal.
If this was indeed the business plan, I am tremendously impressed. Having the insight to set out on such a path – realizing that answers lie more explicitly within data than text and that social networking and attribution with commercial resources would overtake Wikipedia and build an extremely large community rooted deeply in data, discussion, interests, research, query, and more – with such long term vision and communicating it clearly and compelling enough to attract long term investors who grasped the then abstract but executable plan would be a tremendous achievement of capitalism.
This post was motivated by work on a retail e-commerce opportunity that may commoditize product information across search and comparison shopping engines, for example. The challenge I am considering is how to realize value from semantic web content that needs to be licensed for broad use but the investment in which needs to be protected both in terms of integrity (i.e., as a standard) and from commoditization by competitors or lack of copyright enforcability. Freebase licensing of content and APIs are of particular interest but not worth pursuing further here given the title of the article.
- However, if you have thoughts on Freebase’s business model or on how to provide value to the semantic web without losing the invested capital, please share by email (mailto:email@example.com) or comment here.
- For those interested, Scott Brinker’s blog has interesting discussion but lacks examples or specifity with regard to commercial business models.