Sunday, 30 June 2019

Data, business & the economy 2: Should the ‘miners’, that is you and I be paid?

In the prior first part here the value of data is explored, suggesting that the modern factory is a data factory.

Should the ‘miners’, that is you and I be paid?

There are undercurrents.

Jaron Lanier first wrote about payments in his 2013 book, Who owns the future? suggesting that we get paid for the data we provide.  The rationale was that data tech firms treat data as material, which comes to them at no cost. 

Governments have started considering ownership of data, “Ownership of personal data underpins these issues, which is why debates on introducing the concept of ownership of data as a legal right have recently emerged at the EU level and beyond. In 2017, issues concerning ownership of data occupied regulators’ minds in the United KingdomAustraliaIndia, as well as the European Union.”…..regulation is probably the only way the data firms could lose control of the data they make their money, if,… and obviously huge battles lies ahead with this approach.  A more amenable way is for the firm to share ownership with the ‘miners’.  Or an indirect way is for the data firm to allow the user to make available his data to, say, insurance firms, so his premiums are lowered.

Berners-Lee of W3C, a consortium that determines Web technology standards, launched in 2018 a development platform called "Solid" aimed at giving users control of their data.

Judging from their high-profit margins, there may be a case. 

And, I think, inevitable that some payments would be made to the ‘miners’ when society adjusts to the new economy, in the form of tokens (exchange for services), or what I call nanopay, tiny amount, say, 0.01 cent or fractions of a cryptocurrency.  Tiny, because consumer’s data in isolation has little value, aggregated it has.

Payment solves the issue of ownership of data and privacy.  If ‘miners’ choose to monetise all or some of it, privacy becomes a non-issue since now they make the decision.  Laws should, however, be enacted to protect the minors and regulations against unscrupulous use of data.

“The majority of people between 18 and 34 would be willing to let insurance companies dig through their digital data from social media to health devices if it meant lowering their premiums, a survey shows. – june ’18

Data related to insurance could be in their personal data wallets that should include compartment for the car (how they drive), health, data from usage of online services, and so on.

Thanks for coming this far in the article and be sure to leave your comments.

If so, data wallets aplenty

If personal data has value, we will need somewhere to store it.

Data wallet is a contender.

Beginning with basic data such as sites visited, over time this wallet could store our buying habits, usage data, online behaviour and meta-data.

The consumer can then use it to trade for services eg. bus ride (an instance in the US), make a purchase, reduce insurance fees or watch a paid YouTube channel.  It’s bartering all over again, re-imagined and likely through an online exchange.

A retailer may want to be in that exchange to sell, perhaps at a discount, for consumers’ data.  Or pay consumers access to their data for insights.

Data analytics firms will compete to process personal data; for a fee, a digital token, an exchange or even pro bono.  Processed data adds value to the owner.  They will aggregate data from selected consumers based on clients’ requirements.

Privacy, data, ownership & nano-payments

Is there conflict with the digital model of monetising consumer data exchanging it for using a service? The Cambridge Analytica case where Facebook provided the data implies yes.  But that is a case of abuse.  It’s clear now that personal data should not be sloshed about. After the storm settles an appropriate model will result together with new laws.

Will the service providers stop providing free service? Unlikely because they depend on consumer data in the first place.  What’s more likely is a compromise.

Considering the massive profitability of such firms, there could be space to share it with consumers through nano-payments.  The fines being imposed by EU and others to follow could be the starting point to determine the value.

The issue of privacy vanishes if it is the consumer who decides.  Obviously like money, there should be regulations and a legal framework to protect against the unscrupulous.

If this scenario pans out, we determine if we want to share our data.  We determine our own privacy or more specifically the level of privacy and how it is shared; all, some or specific forms for a price.  It recognises that data has value.

Businesses will have their own wallets and similarly used for trade and for leasing.  Perhaps even the government.

And what of governments?

Governments have a lot of data. 

In an era where data has value, would it be allowed to lie fallow in their data vaults?

This data can benefit society.  And businesses, for which they will pay for.

Government data does not have to be released raw to the buyer.  Instead, they could be processed in-house.  Only the results are provided.  Other ways are to supply anonymized data or partially processed data, stripped of consumer names.

Monetised, the government will now have a new source of revenue, businesses get insights to better their businesses, the tax burden on citizens perhaps reduced.

In this scenario, probably shocking to some officials only because it’s radical presently actually benefits the economy and in particular the citizens.  Patient data from government hospitals can help produce better medicine or lower insurance prices.  Municipal data can reduce crime.

However, governments cannot simply provide data but what if this is treated like a municipal license, say, an annual license to access specific slivers of anonymised data under specific terms?  Obviously, privacy must be respected but there are ways to handle this as discussed earlier.  Data regulations and a legal framework should also be in place.

In a digital economy, it would be a waste if data is left idle when it could be optimised to benefit the country.  As economists say, money needs to move around to improve the economy.  If data now has monetary value, wouldn’t this apply?  It should, so the first data regulation, on sovereignty is puzzling.

In the concluding post here, we ask if businesses could monetise their data besides using them to improve business.  And what could the data ecosystem look like as it grows from its beginnings today.

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