The next consumerization revolution: Your personal data

When Facebook’s much-vaunted IPO fell flat a couple weeks ago, conventional wisdom said the dot-commers’ belief that almost any online business can make billions through advertising was not a realistic business model after all. Advertising fees online trail those of other media, and multiple studies show that when people are engaged in social networks, they tune out ads precisely because they are so focused on their interactions.

The conventional wisdom is right, but not complete. I believe that in the next two or three years, an even more fundamental assumption about these businesses will be turned on its head. Whether it’s Facebook, Twitter, Google Drive, or Pinterest, the truth is the product is you — all that data about you used to target ads and sales pitches. It’s hardly a new business model — it’s how trade publications have made their money for decades — but in the online world all that information is easily stolen, traded, and spread. Yes, I’m talking about the issue of Internet privacy, though Silicon Valley remains tone-deaf to the topic.

You’re giving away what’s valuable about you Right now, users give away valuable information about themselves. Sometimes they get something of real value in return, but most online businesses give away worthless “value” dressed up using gamification techniques. Klout, I’m looking at you.

As we see more data breaches and grosser levels of disrespect for user privacy, I suspect the public will start to realize they’re being had. And as they’ve learned they can do in other venues, they’ll take charge. 

The pieces are out there to create a data brokerage that pays you I fully expect to see services pop up that act as personal-data brokers, giving users a cut of the money made from their personal information — the data users explicitly choose to share, not what is gathered about them sneakily. Again, this business model has long existed, but not in a way that allows individuals to participate in the proceeds.

Companies such as Amazon.com and Rakuten (better known by its LinkShare brand) already have similar businesses based on giving users a cut of sales from their product referrals. The tracking and payment platforms are in place, as are the reach and trust in Amazon’s case. A company such as R.R. Donnelley, which handles about half the junk mail (postal and online) in the United States and microtargets it based on your available data, would be a natural in this business as well, though it would need to create a brand from cloth.

Apple’s forthcoming Passbook service in iOS 6 could also be a foundation for your personal data portfolio — imagine if Apple lets you use your iCloud or iTunes ID as a universal ID, tied into your payments and Passbook accounts. Apple’s track record of empowering users over their personal data is better than most, and it has the reach to be a common ID/data vault, especially given how much personal data you aleady entrust to it via iTunes and iCloud.

Users are already choosing Facebook as a central ID across websites (never mind that Facebook is a terrible steward of your data). That could easily become not just an ID but a personal information vault that Facebook also sells — without paying you or even worrying about what you want shared. There’s also of course OpenID. Many of the pieces are in place, just scattered.

The telecom carriers are interested in such a role as well, though they’ve focused mainly on back-end services to enable secured digital identities. They keep looking for ways to get into new markets and have dallied with payment systems, app stores, and other services for years, though I wouldn’t trust any of them to be an honest broker.

As you can tell, I don’t see the personal privacy issue the same way the advocacy groups do. The information is out there and will stay out there — the very act of digitization means the data is easily shared, manipulated, and used. That genie can’t return to the bottle as the privacy groups demand.

Instead, I see the issue as a business proposition. If the data has value — and we know it does — its creators (you and me) should be paid for it. And if we take over the selling of our data, all those companies using it now have to respect us and abide by our standards. Currently, we’re a free resource to mine whether we like it or not; we’re the Indians trading trinkets to the Dutch for Manhattan. That didn’t work out well for the Indians, did it?

I’m all for bartering personal information for valuable services — heck, that’s how InfoWorld makes the money to pay me and the rest of the team — but too much of that “value” proffered has no value. As users opened up the corporate technology tool chest with BYOD, they too will open up the business of making money from their own data. The companies buying it will also be more likely to safeguard it, because we won’t sell to those that don’t; if they let it get loose through sloppiness, they essentially end up subsidizing their competitors. The free market can be our friend in protecting our personal information.

To help that day come sooner, assess the sites you’ve signed up for and unsubscribe from those whose value is tiny. Remember, they’re making hundreds of dollars or more a year from your information. If you’re not getting that much value back, cut them off. That way, you use economic pressure to steer the market in a better direction. It worked with the major banks’ attempts to gouge debit card fees from all of us to recoup the losses they created. It can work again.

This article, “The next consumerization revolution: Your personal data,” was originally published at InfoWorld.com. Read more of Galen Gruman’s Smart User blog at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.