Monday, June 16, 2008

The Future of Personal Data

In a recent post about ULS systems, I said this:
The balance of power, from individuals all the way to the top of whatever organizations exist in the future will rest in information. Not like it is today, however. The "information economy" of today (+/- 10 years) will look like kids' games and playgrounds. The information economies this will evolve into will be so completely integrated into human existence that they will resemble the basic necessities like water and food.
I'm not going to focus on the ULS systems topic in this post, but there is a very deep connection between privacy, personal data and all things ULS. Any thoughts of a ULS system should be coupled with how this will impact the system's users and their data. Any thought of our personal data's future existence should include the anticipated future of computing: ULS systems.

Inside and Out

In a nutshell, here's how things look:
  • Yesterday: Paid Services - You want something, you buy it. Demographic research is expensive and mostly outsourced.
  • Today: Free Services - You want something, companies give it to you for free... in exchange for your demographic data.
  • Tomorrow: Information Economy - You want something, you leverage the value of your information in brokering the the service deals that mean the most to you.
What do we have right now? Companies are fighting for each other over who gets to have our data for free. Yay, free stuff! We used to have to pay for that sort of thing! But paying for people to hold your data was the old, old world. Having them do it for free is the old world. Here's the new world: They pay you.

Why would they do that? Why would things shift from the current status quo? The value of personal information.

There are many ways to assess the value of personal information, but let's look at a few from the perspective of large organizations (entailing everything from government to business). Simplistically, we can assign value to a single individual's data based on the value of a large collection of many individuals' data. The more participants, the greater the value of the whole, and therefore the greater the value for each individual's data. This perspective is limited because it treats data very staticly. The data may change, but in relation to the system it's "acquired" and inside as opposed to "for sale" and outside.

We Are the Markets

But the value of our data is not defined simply by the presense of bits or membership in a valued data conglomerate. Our data is not just our emails, our medical records, our purchasing trends, nor our opinions about local and national politics. Like an organism moving through an ecosystem, our data is dynamic and living; it is the very trace we leave in the world around us, be it digital or otherwise.

Any part of our lives that is ever recorded in "the system" provides data and comprises part of our movements through this system. Our traces through this digital ecosystem impact it, change it, shape its future direction. The collective behaviours (not just collective data) are immensely valuable to organizations. Their value is on-going and growing, with accrued, compounded interest.

Static data bits seem like property to us: you can buy them, you can sell them, you can store them somewhere. But moving, living data... that's a different story. That's not a buy-once commodity; ownership of that might be tantamount to slavery in a future, information-based economy. However, organizations might opt to lease it, or individuals might turn the past back on the future and offer license agreements to organizations.

More likely, though, individuals will form co-ops or communities (we have already seen this happend extensively in today's Internet) with shared mutual interest. Seeing how a group entity with shared values has a larger effect on the system than single individuals, data from such groups would likely be much more interesting and number-crunch-worthy. The greater power a group has to perterb systems' ecomonic or political trends, the more valuable that group's data will be to other groups.

In addition, I'm sure there'd be all sorts of tiered "offerings" from individuals and groups: the juicier/more detailed the data, the higher the premium offered. The changes this will introduce to markets (global and local), legal systems, and politcal organziations are probably barely imaginable right now. But what would it take to get us there? What would it take for my data and your data to be valuable enough to transform the world and make Wall Street look like an old-time, irrelevant boys club?


One thing: a fanatical devotion to privacy, pure and simple. Security and a fanatical devotion to privacy. Two things! Okay, reliability, security and a fantaical devotion to privacy. Three things!

Monty Python references aside, an economy that values the data of individuals and groups can only arise if that data is secure. If we live in a topsy-turvy world where the Government, MPAA, RIAA, the Russian Mafia, and Big Hosting Company are pirating our data, then we're hosed. However, if our data is secure and contracts are effective, then we will have a world where data is the currency. There are an incredible number of hurdles to overcome in order for this to happen, however.
  • The System - we need a system where user data can be tracked, recorded, and analyzed, and there's enough of it to matter
  • Storage - we need our own, personal banks for our data (irrefutable ownership rights and complete power over that data)
  • Transactions - we need a mechanism for engaging in secure, data transations
  • Identity - when making a transation, we need to be able to prove unequivocally that we are who we say we are
  • Anonymity - we need to decouple activity in the system and identity, thus requiring organizations to come to us (or our groups) to get the definitive data they need
  • Recourse - we need a legal system and effective laws that protect the individuals and groups against the crimes of data-hungry organizations; fortunately, we will have had years of established precedent protecting the sellers from the buyers... oh my, how the tables turn!
And that's just off the top of my head. There's got to be tons of stuff which hasn't even occurred to me.

Closing Thoughts

Information will be as essential for us as water, yet there is a very interesting divergence from the example of a hydrological empire: each individual is the producer of some of that metaphorical water. By virtue of this difference, we hold the keys of the empire. We will be more a part of the economic and political powerbases than we have every been at any time in human history.

Of course, that means that we've got to get ready :-) This is already being done in many different ways. Everything from community housing cooperatives to small, co-op banks; from capabilities-based programming models to secure online transactions. Like the next 20 years of research needed for ULS systems to become a reality, we've got just as much work to do in order to guarantee our place in the economies of the future.


B said...

Is that level of detail on individual behavior really that valuable? Don't we really just need statistically significant data? Will behavior really be that difficult to predict, that the marginal data or marginal "user" is really that valuable?

For instance, if a company only needs the data of 2000 users to be significant, what would they pay for the 2001st? Same question regarding pieces of data. How variable are peoples lives after a certain point?

Duncan McGreggor said...

It's not valuable to me, but to retailers, news outlets, the entertainment industry, and governments that depend on polling, it is. Well, right now, the level of detail I indicated in the post is basically impossible. We need much more computing power more widely distributed and highly accessible.

Behviours of individuals will likely always be really, really difficult to predict ;-) But that's not what the aforementioned organizations are interested in. They want trending information. Hell, even predictability isn't really important, as long as you can react quickly, all you need is real-time data. The company that gives the masses what they want when they want it has an edge over that which gets them what they wanted a few seconds later.

As for the question about amounts, I don't know if there's a good answer for that. I haven't heard of any company that bases its business model on user data that only needs a small number of samples. As a counter example, look at Google Ads: how many millions of poeple's data (emails) are generating revenue (via ads)? The fewer the people, the less money. The less data, the less accuracy in their targeted ads, the less money. For that model, more is more.

That's been the trend with technology. It's never "enough." Once we have the technology, we find some completely unnecessary thing to do with it, someone starts making millions with that, and we suddenly depend on it (someone does, anyway).

We will create ULS because we need it. Someone will do something completely insane with user data and invent a new economic model. Someone else will come along and do even more processing on the data which fuels that model and trump the other guy.

Finally, people lives are *deeply* variable. We're only just starting to get hints of the technology that will be able to process the minutia that make that obvious. And again, once that data's available, someone's going to figure out some way to make money with it.