Is Personal Data the New Currency?
If you’re a Facebook user–and let’s face it, you are–you might figure that the price is right. “Free” has a nice ring to it, after all. You get a digital forum in which to interact with your friends and acquaintances, to share photos and notes, to poke and be poked–all for nothing. Zip. Nada. Sweet deal, right? How could it get any better?
Well, you could be Mark Zuckerberg, who stands to earn $24 billion in Facebook’s upcoming IPO. But wait a second: since Facebook is free, how did Zuckerberg get so rich? You know the answer, of course: advertising. Facebook owns your data, and is able to monetize that data spectacularly. You get to poke, and he gets to be a multi-billionaire. Fair trade, right?
I’m oversimplifying, of course. But a feeling that something is amiss in this equation is galvanizing people to wonder if the people who should be profiting off their data…are the people whose data it is to begin with. About a year ago, Carenegie Mellon professor Latanya Sweeney told me: “There might emerge a social networking site where you still use the site for free, but if a company wants to use your data, they compensate you.” Imagine, in other words, a Facebook that pays you.
When Sweeney said that, I think I laughed. A year later, the last laugh is hers. Earlier this month, Technology Review’s David Talbot wrote a fascinating profile of a social network called Chime.In which proposes to give users a cut of ad revenue. (Talbot found the site glitchy, but potentially promising.) And this week, AdAge reports that Chime.In is really part of a larger trend of startups that “are launching with the argument that consumers themselves” should control their personal data, which is “being pointed to as the currency of the 21st century.”
That’s probably a bit of hyperbole there: I’d wager that money will remain the currency of the 21st century, present economic woes and the rising importance of personal data notwithstanding. Regardless, these startups are doubtless onto something. A report from Forrester says that more than $2 billion is spent each year on “third-party data about individuals in the U.S.” Meanwhile, paranoia about the “erosion of personal privacy” is the second greatest fear, according to McCann Worldgroup.
When I spoke to Sweeney last year, her main research focus was the security of medical data. Medical data went to dozens of places: “pharmaceutical companies, management companies, analytics companies…disease management houses, equipment monitoring houses.” This data was worth something, and yet it was controlled by people other than the ones generating the data. “Suppose you could see all the places your data went,” she told me.
According to the AdAge report, several startups are doing just this–although they are not limiting themselves to medical data. They’re forming personal “data lockers,” which AdAge defines as “online information repositories designed to be the digital equivalent of a bank with security infrastructure in place.” One such company is the appropriately-named Personal, an open-beta startup that lets users enter their personal information in structured data fields. The site would then act as a sort of commercial matchmaker, brokering consensual relationships between advertisers and consumers: “it’s very predicated on online dating,” Personal’s president tells AdAge.
The other company AdAge looks at is Singly, a somewhat smaller company still in closed beta. Singly would allow you to funnel over your data that already exists in your social networks and purchase histories. It doesn’t appear that Singly would outright pay you for your data (indeed, it seems like it would make you pay for the privilege, beyond a certain point), but you could use it to save money: garnering a lower health-care premium by showing your insurance company you’re staying in good shape with regular gym visits, for instance.
An intriguing video from author/consultant David Siegel envisions what one type of data locker might actually look like.
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