As the raw material of the digital economy, are you worried about your privacy or your cut of the profits?

English: Kazakhstani ID-card. The personal dat...

English: Kazakhstani ID-card. The personal data are deleted Русский: Удостоверение личности гражданина Казахстана. Персональные данные удалены. (Photo credit: Wikipedia)

 

 

The Guardian recently published a story about BUPA buying patient identifiable information from the NHS.  The story explained that the government approved selling access to the NHS patent data in its attempt to maintain economic competitiveness in the global economy. The government want to reap the benefits of this data just as private commercial companies, such as Amazon, Facebook, and Google, profit from the personal data they collect.  Access to the anonymized data would be sold for research purposes and for commercial use.  The government wants to extract the economic potential from the data it holds.  The most valuable, patient data, is held by the NHS. Even though the government is keen to accelerate this programme, the public seem sceptical of its benefits and worried about its effect on their privacy.  The response by readers to the Guardian story on Twitter was anger that the programme was done without their consent.  Their response appears to be a natural reaction to the apparent invasion of privacy. In large part, this is because the public are simply unaware of how their personal data is used. In particular, most of the public are oblivious to what the government and companies are doing and what they want to do with personal data they collect.  In time, I wonder if the public will be less outraged about their privacy being affected and more outraged for being denied a share of the profits.  If this concern emerges, then businesses will have to consider how they can compensate their customers for using their personal data for additional profits beyond the sale of the product that led to personal data being collected.

 

User generated value and monetizing privacy: time to be paid.

 

The public appear outraged that their medical details were being sold.  The story is making readers aware of the extent to which their personal data has been on the market. Two related issues have emerged from learning how personal or consumer data are exploited.  The first issue is that you, the user, are generating the information and ultimately the value.  The second issue is that people want to find a way to monetize personal data.  What this means is the search for a way to put a price on your privacy. This EU report suggests such an approach. Let us consider these two issues in turn.

 

From passive personal data collection to user generated content: you are the raw material of the digital economy

 

We are now in the age of “big data”. Businesses and governments collect large amounts of consumer data, they analysed it to extract valuable insights regarding patterns, trends, and opportunities.[1]  Large and small companies, as well as governments, are looking at ways to mine the data they hold for value and competitive advantage.[2] Data mining, though, has been around for a long time, before Big Data. In the paper-based era, health insurance companies used actuarial tables to set insurance premiums for prospective clients. The difference now is the scale, size, and speed of the mining. Today, super computers and better technology makes the data mining work easier and accessible to all companies.  Moreover, the amount of personal data being connected is, literally, exploding with the increased use of mobile computing devices and online services.

 

More data means more possible profits

 

Businesses and governments use ubiquitous computing and sensors to collect more data about customers and citizens. They analyse the accumulated data to extract commercial or political value. The goal can be as banal such as targeted advertising to the more serious as identifying targets.  The sensors that that collect data are relatively passive and task specific, which means they collect data that is rarely dynamic and valuable as non-repeatable data.  What this means is that user generated data is more valuable. The way in which you interact with the web, your searches or preferences, provide a valuable insight into you as a citizen and a consumer.

 

 Facebook, Google, and Amazon do, why not you?

 

Facebook and Google are well known for trafficking in, and profiting by, your personal data through the way you interact or generate user content on their sites.  To put it crudely, your interactions generate their revenue. You, the user, provide the data that they sell to advertisers so they can better target you the consumer. You may not realize it, but you are the raw material of the digital economy.  Amazon benefits as much from collecting and using your personal data as it does from providing products.  Google’s business model relies in large part on analysing and  modelling users data recorded when they search. Governments, like the UK, are trying to do the same with the data they control. In the UK, this includes selling access to the NHS data. For example, Francis Maude won an award for opening up government data to companies.  Governments and business will mine their data for their respective purposes. The problem with making the government transparent is that it has the potential collateral damage of making its citizens transparent.

 

Monetizing privacy: are you going to get your cut? (Why Ted Nelson may be right and Tim Berners Lee wrong about the Web.)

 

The second issue is the race to monetize privacy.  The idea is that your personal data can be given a value, which can then be used to manage it.  If privacy, your personal data, can be given a price, then that may help it to be protected or exploited. Such a technique will revolutionize the digital economy. If people understand their privacy’s value in monetary terms, they may work to protect it. At the same time, a monetary value would help with determining legal compensation.  More broadly a monetary value would allow a privacy market and a privacy exchange to exist rather than relying on the privacy paradox.  For example, if your telephone number is disclosed that may require small damages to be paid. By contrast, your recent medical diagnosis for may require greater damages to be paid.  Alternatively, you may wish to be paid for your medical diagnosis to be accessed and used for research because you are an outlier.  If companies could pay you for the use, then it may allow its use to be managed.

 

Where is the privacy market and how does it clear?

 

If privacy is monetized, then companies and the governments can better exploit and market privacy related data. The point where people are willing to sell their privacy and the company are willing to buy it may be the point at which the market can that may be the point at which the market can “clear”.  The exchange would benefit the customer and the company. Both sides “profit” from privacy.  Although this approach to pricing privacy may upset privacy advocates, it has a commercial or economic sense.  Moreover, it was also an alternative presented by Project Xanadu ®.

 

What project Xanadu ahead of its times for privacy profits?

 

What project Xanadu envisioned was a web in which links were uninterrupted and could be followed in both directions. What that meant was that personal information used in one setting would be identifiable to the source.  The transclusion of personal data in one location to another location would allow a small royalty to accrue when it was used.[3]  If the value of the use of personal data can be captured by transclusion, then it would change the internet’s use of personal data.  Even if that past is not the Web’s future, managers and users need to be aware of the increased demand for profits from privacy.

 

Can a company take advantage of paying its customers for personal data?

 

Forward thinking companies will want to move beyond considering making personal data available to users towards considering how it would compensate users for the personal data they gather.  By considering this change, beyond the privacy paradox, the businesses that develop this approach may then be in a position to exploit the next big thing on the Web. In some cases, we already see this process at work with loyalty programmes. What remains to be seen is whether the tentative steps in this direction can blossom into a truly digital economy.

 


[1] In a well-known example, Target, a large US retail chain, was able to determine that teenage girl was pregnant before her family by analysing her buying patterns.

[2] See for example, this article from 2006 about how data mining can help banking and retail businesses to obtain competitive advantages. http://icai.org/resource_file/9935588-594.pdf For a view of the EU advantages from data mining see http://www.libereurope.eu/news/licences-for-europe-a-stakeholder-dialogue-text-and-data-mining-for-scientific-research-purpose

[3] See for example, rule 9 of Project “Xanadu Every document can contain a royalty mechanism at any desired degree of granularity to ensure payment on any portion accessed, including virtual copies (“transclusions”) of all or part of the document.”

 

 

 

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About lawrence serewicz

An American living and working in the UK trying to understand the American idea and explain it to others. The views in this blog are my own for better or worse.
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One Response to As the raw material of the digital economy, are you worried about your privacy or your cut of the profits?

  1. Pingback: Brasil Economia Digital » Blog Archive » As the raw material of the digital economy, are you worried about …

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