February 13, 2012

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Should you manage your personal data just so you can sell it to marketers? (And just because somebody’s already buying it anyway, why not?) Those are the barely-challenged assumptions in Start-Ups Seek to Help Users Put a Price on Their Personal Data, by Joshua Brustein in The New York Times. He writes,

People have been willing to give away their data while the companies make money. But there is some momentum for the idea that personal data could function as a kind of online currency, to be cashed in directly or exchanged for other items of value. A number of start-ups allow people to take control — and perhaps profit from — the digital trails that they leave on the Internet…

Many of the new ideas center on a concept known as the personal data locker. People keep a single account with information about themselves. Businesses would pay for this data because it allows them to offer personalized products and advertising. And because people retain control over the data in their lockers, they can demand something of value in return. Maybe a discounted vacation, or a cash payment.

Proponents of personal data lockers do not see them simply as a solution to privacy concerns. Rather, they hope that people will share even more data if there is a market for them to benefit from it.

At most that’s only partially true. I know for a fact that brokering personal data is far from the only business model for Personal (the main company sourced in the piece.) I also know it’s also not what Connect.me, Singly, MyDex, Azigo, Qiy, Glome, Kynetx, the Locker Project, or any of the other VRM (Vendor Relationship Management) companies and development projects listed here (Personal among them) exist to do. Check their websites. None of them align with this story. Mostly they exist to give individuals more control over their lives and their relationships with organizations, with each other, and with themselves.

But the personal-data-for-advertising deal is a Big Meme these days, especially given the Facebook IPO.

Recently I was approached by a writer for CNN who was working on a piece about personal data stores (aka lockers, vaults, etc.). His first question was this: Are people’s perceived value of their personal data in line with what marketers are willing to pay for it?

Here’s how I answered:

Well, exactly what are marketers willing to pay to individuals directly for personal data? Without that information, we can’t say what people’s perceived value for their personal data might be. In fact, there never has been a market where people sell their personal data.

What we do know for sure is that personal data has use value. That it might also have sale value — to the persons themselves — is a new idea, and still unproven. We’re only talking about it because marketers are paying other parties for personal data.

Let’s look at use value first. Think about all the personal data in your life that can be digitized and stored: photos, videos, letters, texts, emails, contact information for yourself and others, school and business records, bills received and paid, medical and fitness data, calendar entries… Today all of us use this data. But we don’t sell it. Yes, others do sell it and use it, but we’re not involved in that.

Now let’s look at sale value for the same data. That only looks like a good idea if the entire frame of reference is what marketers want, not what individual people want.

There may indeed be a market for selling personal data — for better offers, or whatever. But does that speculative sale value exceed the actual use value for the same data? Hard to say, because the metrics are different. Most use value is not transacted, and can’t be accounted for. But it is real. And that real value might be put at risk when the data is sold, especially if the terms of the sale don’t limit what the buyer can do with the data.

As for the actual amounts paid for personal data by marketers — on a person-by-person basis — I think you’ll find it’s pretty small. True, the sum paid to Google and Facebook by advertisers is large, but that’s not necessarily for the kind of personal data people might be willing to sell (such as, “I’m in the market for a Ford truck right now”), and the waste is enormous. Most click-through rates are way below one percent. Also, the belief that people actually want messages all the time — even highly personalized ones — is a mistake. They don’t. Advertising on the whole is tolerated far more than it is desired.

Sure, many are saying, “Hey, third party spyware in our browsers is snarfing up all kinds of personal data and selling it, so why not pay individuals directly for that data?” There are several additional problems with this assumption.

One is that people are okay with all this spying. When it’s made clear to them, they are not. But, on the whole, it is not made clear, so they operate in blind acquiescence to it.

Another is that the money involved would be large enough to make the deal worthwhile. As I understand it, personal data sold on the back-end trading floors of the Live Web goes for itty bitty amounts on a per-person-per-ad basis. But I haven’t seen anybody run solid numbers on this. Whatever those numbers turn out to be, the case is not proven so far.

All the VRM developers listed below are in the business of helping individuals understand and empower themselves, as independent and autonomous actors in the marketplace. Not just as better “targets” for marketing messages.

The movement of which they are a part — VRM, for Vendor Relationship Management — is toward giving individuals tools for both independence and engagement. Those tools include far more than data management (of which personal data stores are a part).

For example, we are working on terms of service that individual customers can assert: ones that say, for example, “don’t track me outside your website,” and “share back with me all the data you collect about me, in the form I specify.” That has nothing to do with what anything sells for. It’s about relationship, not transaction.

I could go on, but I’d rather point back to other stuff I’ve written about this already, such as this, from Data Bubble II:

Right now it’s hard to argue against all the money being spent (and therefore made) in the personalized advertising business—just like it was hard to argue against the bubble in tech stock prices in 1999 and in home prices in 2004. But we need to come to our senses here, and develop new and better systems by which demand and supply can meet and deal with each other as equally powerful parties in the open marketplace. Some of the tech we need for that is coming into being right now. That’s what we should be following. Not just whether Google, Facebook or Twitter will do the best job of putting crosshairs on our backs.

John [Battelle is] right that the split is between dependence and independence. But the split that matters most is between yesterday’s dependence and tomorrow’s independence—for ourselves. If we want a truly conversational economy, we’re going to need individuals who are independent and self-empowered. Once we have that, the level of economic activity that follows will be a lot higher, and a lot more productive, than we’re getting now just by improving the world’s biggest guesswork business.

And this, from A Sense of Bewronging:

My Web is not their Web. I’m tired of being shown. I’m tired of “experiences” that are “delivered” to me. I’m tired of bad guesswork — or any guesswork. I don’t want “scarily accurate” guesses about me and what I might want.

What I crave is independence, and better ways of engaging — ones that are mine and not just theirs. Ones that work across multiple services in consistent ways. Ones that let me change my data with all these services at once, if I want to.

I want liberation from the commercial Web’s two-decade old design flaws. I don’t care how much a company uses first person possessive pronouns on my behalf. They are not me, they do now know me, and I do not want them pretending to be me, or shoving their tentacles into my pockets, or what their robots think is my brain. Enough, already.

While they might not put it the same way, I believe the VRM companies Burstein sources believe the same thing.

Meanwhile, more links to the current zeitgiest, mostly from Zemanta: