Guide
Data licensing vs building your own AI product
Quick answer
Licensing data and building AI products are complementary strategies for businesses in the U.S., Canada, the EU, the UK, Australia, New Zealand, India, Singapore, South Africa, Latin America, the UAE and Saudi Arabia. Licensing provides immediate revenue from existing records without requiring R&D spend, while building internal AI products uses the same data to create efficiencies. Most businesses find that licensing their historical data to AI labs and data buyers helps fund the development of their own proprietary tools.
The facts, from public sources#
- Data licensing generates revenue from existing assets without requiring new product development.
- Proprietary AI tools require long-term capital and engineering commitments.
- Non-exclusive licenses allow businesses to monetize data while retaining it for internal use.
Revenue vs investment#
Data licensing is a way to turn existing assets into cash flow with minimal upfront investment. The AI labs and data buyers pay for access to the records, which can be used to offset the costs of other digital transformation projects.
Building a proprietary AI product, by contrast, requires a significant investment in software engineering, data science, and ongoing maintenance. While the long-term value may be high, the time-to-value is much longer than a licensing deal.
Strategic data reuse#
A common misconception is that licensing data prevents a business from using it internally. In most cases, a non-exclusive license allows the business to sell the training rights to others while still using the data to train their own internal models or improve their services.
This dual-use strategy maximizes the ROI of every record the business generates, from customer support logs to technical documentation.
Risk and control#
Building your own product gives you total control but also carries the risk of market failure. Licensing transfers the technical risk to the AI labs who are building the foundational models, allowing the supplier to benefit from the AI boom regardless of which specific product wins the market.
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