Personal Data: The Ultimate Commodity?
Recently, John Thornhill wrote an interesting article in the Financial Times on the role platforms like Facebook can play in establishing a universal basic income via data. Here is the crux of his argument:
“The most valuable asset that Facebook possesses is the data that its users, often unwittingly, hand over for free before they are in effect sold to advertisers. It seems only fair that Facebook makes a bigger social contribution for profiting from this massively valuable, collectively generated resource.
His shareholders would hate the idea. But from Facebook’s earliest years, Mr. Zuckerberg has said his purpose has been to make an impact rather than build a company. Besides, such a philanthropic gesture might even prove to be the marketing coup of the century. Facebook users could continue to swap cat pictures knowing that every click was contributing to a greater social good. “
In 2011 The World Economic Forum classified personal data as a new Asset Class along with property, investments, cash, etc. This laid the foundation to rethink how data can be utilized to deliver value to the owners and originators, not just the users. In the original report issued by WEF and Bain, they call out both the technical and philosophical challenge:
“At its core, personal data represents a post-industrial opportunity. It has unprecedented complexity, velocity and global reach. Utilizing a ubiquitous communications infrastructure, the personal data opportunity will emerge in a world where nearly everyone and everything are connected in real time. That will require a highly reliable, secure and available infrastructure at its core and robust innovation at the edge. Stakeholders will need to embrace the uncertainty, ambiguity and risk of an emerging ecosystem. In many ways, this opportunity will resemble a living entity and will require new ways of adapting and responding. Most importantly, it will demand a new way of thinking about individuals. Indeed, rethinking the central importance of the individual is fundamental to the transformational nature of this opportunity because that will spur solutions and insights.”
We have come far in developing the technologies that can enable the management of personal data in a trading environment. In fact, Blockchain shows great promise as the underlying architecture to power the trading of data as a type of cryptocurrency and is rapidly evolving as a transformative model for transactions. AI and “Big Data” models have largely addressed the type of analytical frameworks needed to combine data sources, and the marketing world advances in attribution, single-source, and programmatic ads have proven we have the systems to use personal data to deliver highly targeted content (in the form of ads and recommendations) in almost real time based on the digital treasure trove of data available.
However, and as John Thornhill pointed out, today consumers’ data is simply used without direct reward to the consumer. It’s a barter system: “let us use your data so we can try to sell you more stuff, and in return you get access to these nifty technology platforms.” That has been fine, but it’s a far cry from treating data as an asset class that can generate real financial gains for consumers — not just value.
What is missing is not just a shift in thinking, but also a fundamental reshaping of the value exchange. In short, we need to stop treating data as an easily accessible commodity and start paying for it as a precious resource. We need incentives and rewards to help kick-start a new system.
Fundamentally, people do things because they get something out of it: we take action because it fulfills a need, whether it’s conscious or unconscious. This core motivation is central to every school and application of behavioral science. Game Theory and Behavioral Economics specifically have taught us that a system of incentives and rewards are necessary to engage humans. In general, this system can be boiled down to a few key categories:
- Social: Connects us to others for fun and social interactions. Think of all the games on Facebook or online game networks.
- Financial: Delivers a direct financial reward such as research incentives, discount or deal networks, personal data lockers or recommendation systems.
- Values: Altruism, charitable causes, political or social campaigns and anything else that is aligned to our values.
The ideal system combines all of these. The market research industry has actually pioneered quite a few examples in action via the advent of online communities, and there is much from that model that could be applied throughout the research industry in support of a personal data economy. This system looks something like the example below:
- A brand wants to engage in a long-term dialogue with a subset of consumers to explore new product ideas.
- Participants are identified via profiles established in panels or in social media.
- Targeted consumers are recruited and paid a financial reward for engaging.
- Exercises are “gamified” and participants are sent on missions, earn badges/rewards and discuss their ideas and the ideas of others in forums within the community.
- Results are shared back so participants can see how their contributions help create new solutions to issues that impact their lives.
This approach to creating a real, engaging motivational framework for consumers to share their data is a good example of how we can rethink the value of personal data and how people can gain more than just access to apps for its use. That model of value-exchange is proven and has created value for all parties involved — but it has limitations.
A multi-dimensional system that has real incentives and rewards that pay consumers for their participation in an accretive way is not only more fair — it also drives the shift in necessary thinking to support the emergence of the personal data economy. Whether it’s getting a “data access annuity” from Facebook or Google, direct compensation for participating in research or data analysis initiatives or receiving goods and/or services as a “lease” on consumer data access, each model has incentives at their core.
No longer a tactical afterthought, consumer rewards are the tip of the spear in leading a transformation in how consumers use their data for their own benefit vs. others using it for personal gain. Direct reciprocity simply changes the game.
Incentives solution providers today are inherently “fintech” companies. My friends at Virtual Incentives for example use a robust enterprise API system to deliver real time, customized reward options from scores of partners through multiple consumer channels. They are a combination e-tailer, bank and stock exchange, processing millions of transactions at scale — all driven by consumer demand. That kind of technology is a vital key component of building the personal data economy, and the thought leaders behind it need to be part of the debate on what the future should look like.
The debate around personal data ownership and value, alternative and universal income schemes and the role of technology in making it all happen will continue to be important topics over the next few decades. However, incentives and rewards won’t just be a big part of that dialogue; they have already gone far in solving many practical issues.
Building on their firm foundations, the future of the personal data economy looks bright indeed.