As the usage of Apps and other web-based services grows on a daily basis, using data as a currency has been the talk of the town – or more the globe. According to IBM which was quoted in an article written in 2013 by three consultants working for Deloitte: “Ninety percent of the data in the world today was created in the last two years” and “Between now and 2020, the global volume of digital data is expected to multiply another 40 times or more”. There is ever more data online about ourselves and everybody else and we need to figure out how to best use this data while at the same time ensuring data protection regulations stay in force. Turning personal data into money could be a simple way of ensuring all of the above.
We all willingly give our personal data to Websites, Apps and other Internet Service Providers in exchange for free use of their services. At the same time, we value our privacy more than ever (See Chrisoph Lutz‘s piece on this topic) and want those same companies who have all our personal data to make sure data breaches are avoided and privacy is respected. “Free” that’s the problem here, as we all know from microecnomics 101 “There is no such thing as a free lunch” and companies are profiting hugely from the data users provide. In 2012, The Boston Consulting Group even published a study together with Liberty Global analyzing the “Value of our Digital Identy” for companies. They stated that personal data is the driving force in the digital age and that the key to successfully using that data is trust. People have to trust companies with their data and as for now, trust seems pretty scarce if one looks at the news. BCG stresses that
two-thirds of the potential value generation – or 440 billion Euros in 2020 alone – is at risk if stakeholders fail to establish a trusted flow of personal data.
After that study the whole world has been waiting for someone to finally define how much online personal data is worth to its owner! This year Datacoup told us: It’s worth up to $10/month (what – only $10 a month – you have to be kidding me, especially when seeing how much money will be generated with my data by 2020). This is how they sell their business model:
It’s about time you earned more than a ‘free service’ for your data. Datacoup is the only company that helps you sell your anonymous data for real, cold hard cash. It’s simple. If you connect data, you’ll earn.
Their mission is “to help people unlock the value of their personal data”. Supposedly, Datacoup’s business model is based on empowering users again, much like what Anna wrote about in her piece on “Giving data back to its users, MIT Media Lab creates the Personal Data Store“. Except Datacoup doesn’t really give you the power over your data back. They give you money and – according to a recent article in the MIT Technology Review – in exchange they get
access to your social network accounts, credit card transaction records, and other personal information, and will sell insights gleaned from that data to companies looking for information on consumer behavior.
Unless expressly stated otherwise with respect to a particular data request, after your information has been transferred to a Data Purchaser, it is subject to only those privacy protections that the Data Purchaser has committed to.
On the other hand, the company says it will never provide its clients with the raw data, rather the aim is to give companies data based on analyses drawn from that data. So their clients specifically have to tell them what they are looking for, e.g. how often do people actually talk about buying a certain product online and how often they actually spend their money on said product and only then do they receive anonymous data from Datacoup. It is going to be interesting to see how much people will actually want for their data as Luth Research pays $100/month “in return for very detailed data from their smartphones, tablets, and PCs”. Hogan, the CEO of Datacoup, says that the market will decide on how much data is worth and is excited to see what it turns out to be. For now, the value seems to range from $10/month to $100/month.
From a privacy and data protection perspective giving back people ownership and control over their data is a right step in the right direction. But in order for such a business model to give enough value to the person selling his/her data and help them regain trust, companies like Google and Facebook would have to outsource the collection of personal data. That means giving up collecting that data themselves. They would therefore have to change their business model into one that gives users full control over their own data, making themselves dependant on companies such as Datacoup in return. As much as I would appreciate such a centralized form of data exchange (although centralization of data makes way for other issues such as hacking that centralized database leading to the misuse of all my data in one go, as opposed to the misuse of limited data distributed in multiple servers), I am not sure whether companies will change their business models that are working just fine, for now!
As for me, my data is definitely worth more than a mere 10 bucks a month. Figuring out the value of our personal data is going to have huge ramifications for the online world, the public and legislators and I can’t wait to find out!