Economics = Land, Labour,
Capital [foundation of
economics]
Economics
= Land, Labour, Capital, Data [...in
the information
age?]
Data has value;
that we know from the exploits of new economy firms Google, Facebook, Baidu et
al.
Such startups,
primarily data firms (revenue derived from data), are increasing in numbers.
And with machine learning conventional firms
are increasing the role of data in their business. They now see value in
data, once discarded from their daily operations.
This is the beginning.
As society
digitises, more data will be tapped and monetised to benefit businesses,
governments, citizens. The latter in
ways that is unthinkable a decade ago, even now!
What will
industry look like as the data economy enters mainstream? What is the effect on society? Will the suppliers, we, be
compensated if data as The Economist suggest is the most valuable
resource? Will governments
offer up their massive data (privacy contained and managed) - now sitting
fallow, for a fee? Can this compensate
for the tax we pay? This post ponders.
Once superfluous, data is
becoming important for business in the information age
Alibaba rose
with a business model that unlike traditional retailers holds no stocks. Instead it hosts a digital platform for sellers
to list their products. That is, Alibaba
makes money by providing data for buyers and sellers to transact. The foundation of Alibaba business is data. Likewise, AirBnB’s and Grab’s revenue derives
from data, not physical assets.
Most internet startups
are either based on data or data forms a crucial part of their business. This is similar to the early stage of the
industrial revolution. Just as the new
firms (Ford, US Steel, Standard Oil, JP Morgan) then created businesses around
commodities such as oil, steel and industrial machines, this one is on data,
computers and the internet (Uber, Google, Facebook, Ant Financial).
And while there
have always been firms profiting from data, it was never at this scale. The way data is collected is different
too. Unlike the labouring of traditional
data firms, these next-gen firms employ crowdsourcing (a method to source from
the crowd, individuals, to participate in an activity, paid or unpaid, but of
mutual benefit, over the internet (see crowdsourcing; a tool for business), us, largely
based on day-to-day usage of services, itself unusual.
Is data or rather the revaluation of data pointing to new dynamics in the economy?
Anything that can be digitised,
turned into data – products (music, books, software, media), services (voice
phone calls, recruitment, photography, computing), transactions (money) - and delivered over the internet will have its
value reduced, some to zero, transforming industry…messaging apps (telephony
and telcos), Amazon (books and retailing), Uber (transportation and taxis),
Paypal (money and finance industry), Netflix/YouTube/Spotify (video/music and
movie industry).
If your industry involves products that can be digitised, it’s a
candidate for transformation.
Yes.
We have bandied the
term ‘information
age’ about for decades, but never quite figured out what it all means. We now have an instance, data has value. It affects the way business is done.
The modern factory is a data
factory
The process is similar to the factories we are
familiar with. Instead of raw materials
as input and workers turning them into physical products, these new forms of
factories take as input data produced from the usage of services (and other
sources) using computers to ‘manufacture’ informational and quasi-informational
products. These ‘finished products’ – specific, tailored information
are used to support the sales of ads. They also add value to physical products or to services or to
businesses while nuggets of information, refined data and data itself have a
market.
The difference is that instead of a factory,
this modern version is a digital platform. Instead of miners,
consumers produce the raw material. Instead of the assembly line,
networks of computers use analytics, machine learning and AI to assemble
insights of information.
This suggests
that a new form of production is emerging just as moving assembly
lines did in the industrial one.
Prof. Yochai Benkler of Yale in his treatise “Coase's Penguin, or Linux
and the Nature of
the Firm” suggest a new resource in the production of goods and
services through the open source model” …he is referring to a form of
crowdsourcing. With the open source
model, participants from all walks of life partake, out of interest, on a
project, be it software, an encyclopaedia (Wikipedia) or even shoe designs. See Open source business model
This also
suggests that personal effort, personal data has value.
In the second
post here, we ask if the ‘miners’ that is you
and I, should be paid and if this solves the issue of personal data
privacy. Further, we’ll argue that
governments could monetise the data throve they have, using the proceeds to
benefit society, perhaps reduce tax.
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