How Data Brokers Make Money

How Data Brokers Make Money

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To understand how data brokers make money, it’s imperative to understand what they are. Typically, they are companies that work in the background, often unseen or even known by the consumer. Their job is to collect, compile, and sell an individuals’ personal information for marketing or other purposes to companies and other organizations seeking to gain inside knowledge about a specific demographic.  

Data brokers, a silent workforce behind the scenes gathering data for companies, organizations, and other groups. Their income is based on the information they harvest from those who are unaware or unfamiliar with what they do.

Data brokerages are not illegal and they often get the details that are more than a consumer would give out. They look for the details often overlooked or we do not consider when we are putting our information out into the world. But how do they get the information and how do they use it to make money? 

They Collect

How Data Brokers Make Money

The collection of data depends on their clientele’s needs, but you can be certain, the data they collect is to fill a market need. Big or small companies, organizations, special interest groups, are all seeking to get information and knowledge of those they are seeking to connect with or find information out about. 

In reality, we often over look the truth of how our personal data is valuable and vulnerable to those who seek to gain insight into the movements, habits, and interests of consumers, immigrants, political persons, and the average person. Information is its own currency and data brokers have found ways to utilize the currency. 

In today’s world getting as much in depth information on a person is a necessity for businesses, political parties, educational centres, and more. It is really a case of more is never enough.

Quite simply the information collected can reveal a great deal about the habits and activities of the average person. Details such as income, health, criminal records, and more are then compiled into a profile which then the data broker can then offer to fill the needs of companies looking for those details. But it isn’t just the information we think of that is harvested, no, data brokers delve deeper. They want the information we overlook and put into places which seem to be secure, but with the right software, are a well of valuable resources they can take advantage of and convert into a steady revenue stream. 

Gathering the Information

Data brokerages actively seek out the details we as consumers would not consider revealing. They look for information in the usual places, areas where one would not think they could gain access to the details and data they are searching for. All are ripe with data that can be harvested. 

There are multiple ways of gaining the information they seek. Social media, unsecured emails sent, apps online, websites, and other databases from other brokerages, subscription lists and more offer details that can be manipulated into income for their firms. 

Data Brokers will also seek information from other locations, they can access. Sometimes the information they scrape comes from forums, and other locations which a person may not have agreed to have their information shared. Scrapping the information from these sites, forums, and social media can be fairly simple. 

Not all information is harvested by a living person. There are apps and other software that can be used to glean the information they are seeking from the resources they have. You may not be aware of the collection or even consent to the collection of the data. Software and apps which collect the data are doing the collection, and data brokers don’t always look for consent. 

In other instances, depending upon the data they require data brokers will simply purchase it as well. Purchasing information from other databases, brokers, and other sources is often used when the data is sensitive, highly sought after, or harder to get. There are times when purchasing the content from another is the most cost effective way as well. The aim of a data broker is to get as much information as they can to ensure they can meet the needs of their clientele and generate the revenue for their brokerage. 

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Making Money

I’ve spoken of data brokers selling their data, however, that isn’t an accurate description of the process they use. Selling the data would only ensure a one-time revenue stream. Instead, data brokers don’t actually sell the raw data they collect. 

Instead they start off by simply collecting all the data they can. Once they have as much details as they can get from looking in multiple places, they move onto the next stage. The next steps in their process toward making money off data. 

The raw data is then refined into more marketable accounts and folders. Each will contain information various companies could be interested in. The more complex information is of course horded as it is often harder to come by. Once refined the data is then moved into a position to be sold or rather licensed. 

Its important to note – one data file can guarantee a brokerage multiple income streams over and over again. As the information is shared on a per company basis and the same information may be sold to several different organizations. Data brokers then set their pricing on the information. 

There are numerous factors when it comes to the cost to their clients and customers. The more detailed or sensitive the information provided the higher the price. Information that takes longer to get or is more involved may be priced substantially higher than simple data which may come off a website or social media account. 

Details or information of a consumer or individual which are in higher demand or has a higher level of difficulty in acquiring the data will also affect the pricing of the data package. Depending on the organization that’s seeking data, there may be more to getting the details or data and as such brokerages will often increase the pricing to reflect this extra amount of work. For example, information such as a criminal record would carry a higher price tag than if someone shops at a specific storefront.

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How Data Brokers Make Money

Each package of data is worth something. However, as stated earlier, not all are equal. Some have information which is far more detailed, sensitive, or just harder to get. Data brokers then price each of these packages accordingly. Once the data brokers have it in hand, they create files and then break down the information into more marketable and saleable bundles. Each bundle is then separated based on the information they contain and how high a demand there is for the information within it. 

When they have the bundles or packages marked according to demand they are  then broken down into specifics for their clientele. Each bundle however can have more than one organization wanting it and the details may be of higher or lower interest depending on the company or organization looking at it. 

With the data bundles priced to reflect the contents, they can then market them to other companies. These can include other brokerages, businesses, and various other organizations who are looking to get a leg up on the competition or simply want to get access to information that they can then resell as in the case with other data brokers. 

No data broker actually sells the data they have collected. Instead, what they do is license it out to other companies. The licensing of the data allows the data broker to retain all intellectual property or the data but allows them to reuse it multiple times. 

Licensing the product is a way for the company to expand their reach both fiscally and physically. A company that retains the rights to their data can make adjustments to the pricing, to what is offered, and can narrow the content down into a niche. By licensing the data, the data broker is creating a multi-pronged system for generating revenue. Having more than one stream of income allows data brokers to make more money off the same amount of data.

The ability to make more money with less effort also allows them to focus on the continued search for newer information. Content demand is ever changing and to make money a data broker needs to be able to meet the market demand no matter the content. A successful data brokerage will be scrapping data daily from any point it can.

They can also take older data and move it around to give it a fresh feel and once again have a new income stream with what they have on hand. The databases of brokers are immense and constantly growing and developing.

Frequently Asked Questions

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  1. How can you make money as a data broker?

You can make money by collecting data and by aggregating and reselling information to other companies.

To learn more on how to plan your own data broker business click here!

Please note that the contents of this blog are for informational and entertainment purposes only and should not be construed as legal advice. Any action taken based on the information provided in this blog is solely at your own risk. Additionally, all images used in this blog are generated under the CC0 license of Creative Commons, which means they are free to use for any purpose without attribution.