You’re about to become part of the ‘Attribute Economy’
Oh wait, you already are. Only up until now you haven’t realised the direct value of this model. Up until now, your attributes i.e. your data or your information, has been captured and is now in the control of organisations. It’s mostly anonymsed, aggregated and is then shared with other organisations as part of a B2B commercial transaction.
To highlight the model we are the subjects of, Madhumita Venkatramanan, Senior Editor Wired UK, detailed the below in her 2014 article titled, Madhumita Venkataramanan: My identity for sale.
“I’m a 26 year-old British Asian woman, working in media and living in an SW postcode in London. I’ve previously lived at two addresses in Sussex and two others in north-east London. While I was growing up, my family lived in a detached house, took holidays to India every year, donated to medical charities, did most of the weekly shopping online at Ocado and read the Financial Times. Now, I rent a recently converted flat owned by a private landlord and have a housemate. I’m interested in movies and startups, have taken five holidays (mostly to visit friends abroad) in the last 12 months and I’m going to buy flights within 14 days. My annual income is probably between £30,000 and £39,999. I don’t have a TV or like watching scheduled television, but enjoy on-demand services such as Netflix and NOW TV. I passed throughUpper Street in north London every day last week. I can cook a little but tend to eat out or get takeaways often; foreign foods (Thai and Mexican) are my favourite. I don’t own any furniture and don’t have children. I’ve never been married. I often eat with my university friends on weeknights. I don’t care for cars or own one. I dislike any form of housework, and have a cleaner who lets herself in when I’m at work. I shop for groceries at Sainsbury’s, but only because it is on my way home. I am not attached to my neighbourhood, and have no contact with my neighbours; I like the idea of living abroad some day. I prefer working as part of a team rather than alone; I’m ambitious and it is important to me that my family thinks I’m doing well. I often go to the pub on Fridays after work. At home, I am far more likely to be browsing restaurant reviews than managing my finances or looking at property prices online. I am rarely swayed by others’ views.
This motley set of characteristics, desires, thoughts and attitudes comes very close to defining me as a person. It’s also a precise and accurate description of what a group of companies I had never heard of — personal-data trackers — has learned about me.”
This is our scary reality.
For a number of years, consumers have been subject to the ‘free’ model. But, just like our friends below, free comes at a price.
Have you ever given thought to the impact your ‘private’ Facebook profile might have on your life? How about the friends you are connected to on Facebook? What about the things you post about your kids? Have you ever wondered if those photos or posts will have an impact on their lives?
Well Facebook certainly have, filing a patent that would effectively enable them to provide information about your friends to banks so that an average credit rating can be calculated, and used to assess your loan application. But they aren’t alone. Entire industries have been built using our personal data as the raw material. Everything you do online is captured and fundamentally says something about you. Whether the inference drawn is ‘right or wrong’ doesn’t matter all that much. What matters is that your attributes are used, potentially to your benefit, but also potentially to your detriment, in ways that you aren’t fully aware of.
So how lucrative is this model? In 2015, Facebook made $12.76 in revenue per user, an increase of 20% on the previous year. Granted this doesn’t sound all that impressive, but when you multiply this number by the total user base, it’s fairly staggering.
In another example, as part of the Economics of Identity series, OIX released a white paper detailing the ARPU (Average Revenue Per User) potential for Telecommunications companies if identity provision were to become an ancillary service offering. In this paper they highlighted, at depth, the multi-billion dollar opportunity associated with the use of our identities in the U.S. alone. The big upside of this model is that OIX promote people being in control of their own data.
Lastly, in an example that is perhaps most discomforting, here’s what your data could be worth on the black market. As a general rule, it probably fetches around $20.
Is it then any surprise that trust in social networks has declined rapidly in the last 12 months? Deloitte’s Australian Privacy Trust Index 2016 highlighted this perfectly, showing social media’s move from being the third most trusted category, to near the bottom of the entire list.
This is a significant shift in consumer sentiment, with the decrease of trust aligning closely to the increase in awareness around data practices and related incidents. As this has taken place, people globally have been taking action, which can be seen clearly through the rise of Adblocking technology. Now over 200m people have installed Adblockers on their devices. With no signs of this slowing, there is also a call to arms for organisations to modernise their approach to privacy. Privacy by Design is becoming more and more mainstream whilst trust is becoming a viable business strategy.
The market is beginning to move.
In reality, Facebook isn’t a ‘social network’, it’s a gamed mechanism for extracting huge amounts of personal data that can be sold, re-sold and sold again. It’s an advertising machine. Although you cannot question the impact Facebook has had on the world, nor can you argue that their achievements are anything short of incredible, you can strongly argue that the model through which they operate, with their users as the product, is faced with an existential threat.
This existential threat is simple — human beings are going to be the owners and controllers of their personal data. Many have predicted this, and some, like KuppingerCole back in 2012, have proposed some incredible models through which new, unique, societal and economic value will be derived from this market shift, and enabled by technologies they refer to as Life Management Platforms.
The core hypothesis driving progress towards new models is that personal data has become a valuable asset, and that the ownership, control and value derived from personal data will shift solely from enterprises and government, into the hands of the human beings the personal data relates to.
With the advent of the General Data Protection Regulation (GDPR) in Europe, this is swiftly becoming reality. What this means is that the Attribute Economy, of which we are currently the product, will become something we eventually participate in as equals.
When you consider the current model governing attribute exchange, where a company (let’s say an identity provider or data broker of some sort for illustrative purposes) will exchange a single attribute, or group of attributes that collectively represent a profile, with another company for a specific purpose, they charge a fee. This fee could range from a few cents to more than $20. This occurs over and over again, meaning the revenue generated from our identity, or our ‘digital profile’ compounds over time. In simple terms, this is our data being traded as a commodity by someone to someone else without our participation.
Then we move forward to a new model, like the one proposed by KuppingerCole, or the more recent model proposed by the Finnish Ministry of Transport and Communications; MyData. Within this model, people are in control of their personal data. Core to this model is some form of Digital Identity, enabling us to assert our right to participate or purchase as an anonymous persona, without giving away who we actually are. We then have the ability to exchange various attributes, either individually or collectively, with people and organisations we trust. By doing so, we may never have to fill in a form again. We may also be able to navigate the web with far less friction. We may even be able to express our intent to purchase an item or have an experience, push that to a market of potential vendors anonymously, and as we become more interested in a particular product or offer from a vendor, progressively disclose our information up to the point of transaction where we might reveal our true identity if required. This is the essence of the Intention Economy, popularised by author, academic and entrepreneur Doc Searls. In simple terms, this is our data becoming our asset, traded by us to others when we perceive there is value in doing so. This is a model where we participate as equals.
Sound like a bit of a headache? Sure. There’s almost no doubt. This is not a model many of us are remotely familiar with at present. Imagine having to set the consent rules (the terms and conditions for how a person or organisation can use the data you share with them) individually for each and every interaction you have online. The cognitive load is almost migraine inducing.
Fear not however, as this is not what I’m proposing at all. Fortunately for us, Personal Information Management Services (PIMS) are springing up all over the place. These emerging new players are here to try and help us not only get the value we deserve from our data, but enable us to realise that value in simple, meaningful and delightful ways.
As our lives become increasingly digital, and the way we manage life moves almost entirely online, Life Management Platforms, the MyData model, or simply the ability to control our information, becomes increasingly compelling. There are also significant commercial incentives for organisations and individuals alike, with the Boston Consulting Group estimating the value of Digital Identity in Europe alone to be worth €1 trillion by 2020.
PIMS providers are enabling technologies. What they will enable is a market shift from people as the product to people as participants in the value chain, and with it, the opportunity to take advantage of a €1 trillion opportunity.
So, it’s time to say hello to our new friends in the PIMS community. After all, they’re the ones that will enable you and I to get the most value out of the Attribute Economy in the years to come.
