Mine your digital business
BOSTON - Nearly everyone has a digital footprint - the trail of so-called passive data that is produced when you engage in any online interaction, such as with branded content on social media, or perform any digital transaction, like purchasing something with a credit card. A few seconds ago, you may have generated passive data by clicking on a link to read this article.
Passive data, as the name suggests, are not generated consciously; they are by-products of our everyday technological existence. As a result, this information - and its intrinsic monetary value - often goes unnoticed by Internet users.
But the potential of passive data is not lost on companies. They recognize that such information, like a raw material, can be mined and used in many different ways. For example, by analyzing users’ browser history, firms can predict what kinds of advertisements they might respond to or what kinds of products they are likely to purchase. Even health care organizations are getting in on the action, using a community’s purchasing patterns to predict, say, an influenza outbreak.
Indeed, an entire industry of businesses - which operate rather euphemistically as “data-management platforms” - now captures individual users’ passive data and extracts hundreds of billions of dollars from it. According to the Data-Driven Marketing Institute, the data-mining industry generated $156 billion in revenue in 2012 - roughly $60 for each of the world’s 2.5 billion Internet users.
As impressive as this figure sounds, it is just the first step for the data economy. By 2020, the global Internet population will reach five billion; 10 billion new machine-to-machine connections will be created; and mobile data traffic will rise 11-fold.
Given the dramatic growth in the amount of data being generated, together with ever-expanding applications across industries, it is reasonable to expect that individual data will soon be worth more than $100 per Internet user. Within 10 years, the data-capture industry can be expected to generate more than $500 billion annually.
Based on these projections, one might wonder what kind of compensation the creators of this multibillion-dollar data can expect. As it stands, the answer is none at all. Individual users are at the bottom of a broken economy. The value that their data generate is being collected by third parties, and sold to whatever cash-rich organization is willing to purchase it.
This does not have to be the case. The first step toward reclaiming some of the value of our own data is to view this information as an asset, rather than as a by-product. At that point, Internet users can find ways to take control of their own creation.
Already, Facebook users can export all of their personal data as a zip file simply by clicking a link on their profiles. Presumably, they could sell that information directly to the organizations that want it, instead of allowing Facebook to do so.
Of course, the data market does not yet exist on this scale. But, as Facebook’s data-export facility demonstrates, a new model that turns data into an asset and consumers into producers is not a distant prospect. Such a model would empower billions of Internet users by making them beneficiaries of a transactional exchange - one that adds value in every direction.
Beyond enabling individual Internet users to monetize their data, this model would benefit data buyers by connecting them more closely to consumers - not least by diminishing the mistrust that can arise when users are not complicit in the sharing and use of their data. Indeed, firms that acknowledge that personal data are personal property will be in a better position to build relationships with individual consumers, thereby gaining deeper insights into their specific needs and desires.
If passive data are worth hundreds of billions of dollars when sold by third parties, the data that individuals choose to share - reliable, honest insights into their motivations as consumers - should be worth much more. By recognizing the individuals behind the data, companies can access and share in that value, within a fully inclusive data economy.
Personal data is exactly that - personal. People should choose whether to share it, and they should be able to share it on their own terms.
Copyright: Project Syndicate, 2014.
*The author is the CEO of Jana, a World Economic Forum Technology Pioneer.
by Nathan Eagle