Foursquare will leverage data into new revenue stream

Foursquare will start charging some businesses for access to data gathered on customer check-ins

Financial trends and news by Steven Loeb
June 27, 2014
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(Updated with comment from Foursquare)

Foursquare has two big advantages over other social networks: its entire model is based on  location, giving it a leg up when it comes to local advertising. At the same time, it has a huge database of businesses that its users have checked into over the last five years, and which businesses want access to. 

So far, the company has only been taking advantage of the first half of that equation, releasing a slew oflocal advertising products, but it has been giving away its data for free. Now, finally, the second half might be coming into play as well, as the company has five years worth of data that it has gathered, and it looks to be ready to make some money off of it. 

Foursquare is going to begin charging some businesses for access to its database of restaurants, shops and venues, it has been confirmed to VatorNews. This news was first reported by the Wall Street Journal.

On its website, Foursquare explains how its Venues Platform works: it allows developers to "use Foursquare as their location layer." The API lets them search the database, find info regarding tips, photos and check-in counts, as well as find places that are trending or being highly recommended places.

"Using Foursquare’s venues database is one of the most popular ways developers interact with our platform," the company says.

Not all businesses will have to pay for access; Foursquare is already in negotiations with the "heaviest users of its data" to pay fees or offer services in return, Chief Operating Officer Jeffrey Glueck told the Journal. Ultimately, this move will affect less than 1% of the 63,0000 companies that access that data.

"Foursquare has begun conversations with a handful of large enterprises using our database for commercial purposes to contribute to the upkeep and innovation of our platform," a Foursquare spokesperson told me "It is important to stress these conversations are with large companies with substantial revenue, or issue hundreds of millions of API calls a year and make up less than one percent of the 63,000 developers leveraging the Foursquare platform. For the other 99 percent of developers, there will be no change in how they work with Foursquare, and they will continue to get API access for free."

This is not the first time that Foursquare has leveraged that data; in February the company entered into a partnership with Microsoft to allow the company to license Foursquare's places database on Windows products, such as Bing, and the Windows Phone operating systems. At the same time, Microsoft also invested $15 million into Foursquare.

According to Glueck, data licensing could become a significant revenue maker for a company that is already growing quickly.

The company saw 500% growth year to year from 2012 to 2013, and 600% growth from the first quarter of2013 to the first quarter of 2014, a company spokesperson recently told me. Sources told the Journal that the company generated between $15 million and $20 million last year, up from $2 million in 2012.

Foursquare currently offers six different types of advertising solutions for businesses on the network, including Promoted Places, which are used to drive new customers in-store, and Merchant Claims, which gives businesses control over their Foursquare listing, and provides them with a suite of tools and analytics to track the number of check-ins at their establishment.

VatorNews has reached out to Foursquare for comment on the report. We will update if we learn anything more. 

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