Who would really benefit if postcode data were free?

Perhaps not Royal Mail, which this week hired London law firm CMS Cameron McKenna (2008 revenues: £235m) to send legal warning letters to the two developers behind ernestmarples.com, which was scraping postcode-to-location data from other websites on the net.

Royal Mail claimed that Richard Pope and Harry Metcalfe, the duo behind the site, had caused it "loss". As the PostZon database being accessed via ernestmarples.com – named after the man who introduced postcodes to the UK – costs about £4,000 a year to license, could it be right?

Some simple calculations show that in fact everyone else, including the government that owns Royal Mail, and perhaps even Royal Mail itself, would benefit from the data being free.

Pope and Metcalfe point out that ernestmarples.com, which queried other websites that provide PostZon data for its postcode-location conversions, fed a number of their other websites – including Job Centre Pro Plus (which used a postcode lookup to find jobs near you), Planning Alerts (which alerts you to new planning applications in your area) and The Straight Choice (used to file election leaflets by area).

Job Centre Pro Plus had 437,354 searches for jobs since March this year, according to Metcalfe. If only 0.001% of those led to someone finding employment and saved £100 in benefit payments, then ernestmarples.com has, overall, saved the government money.

And Pope points out that professional property developers used PlanningAlerts "since it allows them to look for opportunities/competition".

If that led them to work worth more than £20,000, the 25% corporate tax rate means the government has received more in tax revenue than it has lost from Pope and Metcalfe's non-licensing of PostZon. Pope also notes that "few councils were using the PlanningAlerts API [programming interface] since it was easier and cheaper than paying external consultants to hack they achingly bad internal systems." He points to Lincoln City Council, where PlanningAlerts was used to generate the RSS feed and map for planning. Would it cost more than £4,000 for Lincoln to build a system to do the job PlanningAlerts enabled?

Furthermore, "I was told by someone at the Electoral Commission that they used the Straight Choice during the Euro elections to monitor parties," Pope said. "The alternative would be paying for hundreds of field agents (which they can't afford)."

Rufus Pollock, a Cambridge economist who co-wrote a study for the government on the economic benefit of making trading funds' data free, calculates that making PostZon free would bring an economic benefit 50% greater than Royal Mail's present revenues.

The only question now is whether Royal Mail – and the government – have noticed and will do something about it.