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Data gold-mining

Businesses need to start properly rewarding their customers for access to their personal data

10 March 2018

9:00 AM

10 March 2018

9:00 AM

You’re probably not aware of it, but there is an injustice being perpetrated on every man, woman and child who owns or uses an electronic device. Every time you turn on your smart phone, log onto your laptop, clamp your Fitbit to your wrist, drive your sensor-enabled car or send a text, email or post on Facebook or Twitter you are manufacturing a valuable commodity. Whether you know it or not you are creating a valuable, tangible real commodity – as surely as if you were throwing a pot on a wheel or turning a table leg on a lathe. That commodity, is your digital persona – the data exhaust left behind you in the digital world whenever you use an electronic device.

Your digital persona is valuable to companies and increasing in value all the time. There are a number of technological and economic factors which are driving up the value of your digital persona: the reduction in the cost of storage and computer power, the spread of cloud computing which puts scalable computational platforms in the hands of even small to medium-sized companies, the acceleration of research and development in algorithms which are capable of extracting commercially valuable insights from raw data and finally the emergence of miniaturised wearable devices which collect an ever-increasing number of aspects of your daily life in a digital form.

These factors enable companies to extract facts from your digital persona, make predictions about your intentions and behaviour and design and test interventions to influence the way you make buying decisions. If you’re in any doubt about the value of this, consider the market capitalisation of behemoths like Google, Facebook, LinkedIn and Twitter, all in the tens of billions. The value of these companies is largely driven by their ability to capture and monetise aspects of the digital personas of their users.

But who owns your digital persona? If you read the end user licence agreements of the major social media platforms you will find that they explicitly state that you own your personal information, but that you assign to them the right to use it in multiple ways. Here’s a quote from Facebook’s Statement of Rights and Responsibilities: You own all of the content and information you post on Facebook, and you can control how it is shared through your… settings… You give us permission to use your name, profile picture, content, and information in connection with commercial, sponsored, or related content (such as a brand you like) served or enhanced by us… By ‘information’ we mean facts and other information about you, including actions taken by users and non-users who interact with Facebook.

So, you are producing a valuable commodity, which you own, yet which companies are using for commercial advantage without paying you. It is true that you receive some benefits in return for your personal information such as free email services of social networking service. But is this enough? Why aren’t you receiving cold hard cash into your bank instead of the ad-laden ‘free services’. If data really is the new oil of the modern economy, the primary producers of those data should be getting a slice of the pie.

There are signs that this situation is starting to change. Organisations dedicated to rectifying the imbalance between the relatively powerless digital citizen and the relatively powerful companies are springing up around the globe. One notable example is the HAT Project (HAT standing for Hub of All Things) dedicated to enabling individuals to collect, control and combine personal information in a privacy-preserving manner. And there is Solid, a project led by Prof. Tim Berners-Lee, one of the founders of the internet, which aims to create true data ownership as well as improve privacy.

As well as these grassroots organisations, there are legislative moves afoot. As of May this year, the General Data Protection Act will come into effect in Europe. Under GDPR, organisations will need to be transparent about their data use and disclose what information they hold about their customers. Here in Australia, the federal government recently legislated in favour or mandatory disclosure of data breaches and the Productivity Commission is currently undertaking an inquiry into the influence of digital platforms in Australia. In a previous report, the Commission recommended amendments to the Commonwealth privacy legislation as well as the creation of new legislation — a new Data Sharing and Release Act.

While not-for-profits and government can have some influence to bring about these changes, the most powerful engine of change will be the market. When customers start demanding transparency, control and compensation for their personal information, companies will be motivated to adapt in order to retain and grow market share.

This business model of exchanging unfettered access to valuable personal information in exchange for ad-ridden services will be gone well within the next five years and the personal information economy that replaces it will affect every digitally-connected individual and every business on the planet. A Primary Personal Information Market (PPIM) will emerge on which the individual retains ownership and control of their personal data streams but will be able to sell insights which can be derived from these data. In order to be effective, this market will need to operate on a transparent basis, as opposed to the opaque secondary market which we see in operation at the moment. The individual will need to be in control of whether or not the insights extracted from their data is exchanged on the marketplace; on an ‘opt in’ basis. This may sound obvious but the situation currently is that while theoretically you are opting in when you agree to the terms and conditions, in practice very few people actually read these monolithic documents. In a recent experiment, thousands of people unwittingly agreed to undergo community services such as cleaning festival loos, hugging stray cats and dogs, and scraping chewing gum off the streets when they ticked the ‘I agree’ button to get access to free wifi.

Whether companies like it or not, individuals are becoming increasingly aware of the value of the personal information they generate and are demanding more control over that data, more transparency into what is being done with it and most importantly more compensation for the value they have contributed to business via those data. Whether it be in response to government regulation, customer expectations or the initiatives of their competitors, businesses will need to adapt to the era of consumer-controlled data in order to remain competitive. And the sooner they start adapting the better.

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