🍕 The Data Is Ours. Why Can't We Monetize It?
👋 Hey, Joan here with an edition of The Index. My goal is to help founders, CEOs and leaders adopt emerging technology.
Data is the single most valuable resource in the modern economy. From tech giants to retailers, companies large and small are actively finding ways to collect, analyze and monetize consumer data. This data helps drive everything from product recommendations to credit approvals, but while most data monetization happens at the corporate level, there is a growing movement towards individual data monetization.
The question is damned simple. The data is ours. Why can’t we monetize it ourselves?
In today’s Index, we’ll look deeper at the emerging idea of individual data monetization. What could data ownership mean for the average consumer? Does it provide new revenue sources or further threaten privacy? We’ll explore potential upsides like personalized services and direct earnings. We’ll also examine possible downsides like privacy violations and information misuse. Finally, we’ll consider how new technologies like Web3 could allow individuals to reclaim data control. By understanding both sides of the individual data monetization coin, we can have a thoughtful discussion about its implications.
Understanding Data Monetization
For decades, companies have been voraciously collecting user data to derive valuable insights and better target their products, services, and advertising. Retail websites track browsing history to suggest products and deals tailored to each customer’s interests and habits. Based on our evident preferences, streaming platforms analyze our viewing history to recommend new shows and movies we will likely enjoy. Our data fuels the highly-targeted ads we see everywhere online, shapes the social media content that fills our feeds, and informs the opportunities and interactions we receive.
Companies like Facebook and Google make billions selling access to their massive user datasets for targeted advertising and machine learning research. Meanwhile, data brokers amass and sell consumer information to banks and lenders who use it to evaluate creditworthiness, crunching data points on payment histories and online behaviours. The information compiled from our digital footprints - web pages visited, purchases made, interests and habits - comprises a unique digital identity with immense commercial value.
In the wake of large language models like ChatGPT, user data has become more precious than ever as a fuel source for training and refining these AI systems. Our data provides critical information for machines to understand natural language, current events and human preferences.
With Apple securing user data and blocking the faucet of personal information that the programmatic advertising industry has used for the last decade and change, data has become a scarce and extremely valuable commodity, even as AI capabilities rapidly advance.
Until now, corporations have predominantly dominated data monetization, treating users as passive players with little control over or compensation for their digital exhaust. There is a growing push towards monetising individual data, giving people more sovereignty over their digital identities, particularly with user trust around data management steadily declining…
Startups have emerged that allow users to profit from their data by controlling third-party access and selling it directly to interested parties and platforms. New apps even pay users small amounts in exchange for collecting granular data on media consumption, shopping behaviour, location history and more. This nascent data economy puts the monetization of personal data directly into the hands of individuals rather than companies.
Advocates argue that personal data monetization upholds privacy while fairly compensating data creators. Paying users for their data also incentivises people to provide higher-quality data. However, critics point to ethical issues like low-income people feeling pressured to sell their data for essential income. There are also concerns about the security of platforms enabling individual data sharing. If not properly anonymized and protected, user data could be exploited or fall into the wrong hands. Furthermore, some argue personal data monetization will only entrench existing inequitable power dynamics, with tech giants still positioned to extract more value from user data than individuals can themselves.
As data becomes an increasingly important currency in the digital economy and machine learning revolution, which ultimately benefits remains contested. User control and compensation are crucial, yet monetizing personal data at scale comes with risks and skewed incentives.
The Potential Upsides of Individual Data Monetization
Allowing individuals to control and sell access to their data has some clear upsides. Perhaps most apparent is the ability to generate direct revenue. Though current earnings remain modest, they have the potential to add up and provide consumers with a portion of the large profits made from their information. If more online platforms and apps compensate users for access to information, individuals could see meaningful earnings.
Beyond direct payouts, individual data monetization could also lead to valuable personalized services. When our data is fragmented across countless platforms, none can form a complete picture of users. By consolidating and sharing information selectively, consumers could access customized services. For instance, an individual could share their purchase history with a personal shopping concierge to receive highly tailored recommendations. Media viewing data could inform a streaming service to suggest the most relevant shows and movies.
Individual data monetization could also return some power to users. We have little control over data gathering by apps, sites and devices. By owning data, individuals can selectively share it only under agreeable terms. User-controlled monetization protects people's privacy while accessing shared data's benefits. It provides consumers with more autonomy over digital identity.
The problem: individual data monetization also comes with considerable risks. Critics point to the potential for severe violations of privacy. While consumers may share data consensually, concerns over how it is ultimately used exist; hiding consumer data can be difficult once it enters larger data broker networks.
There are valid worries that individual data monetization could enable predatory targeting. Sharing granular data for compensation may allow most lucrative opportunities to be reserved only for those deemed "worthy" by algorithms crunching earned data and disadvantaged groups could be excluded from credit, employment or healthcare opportunities.
Monetizing personal data risks magnifying existing inequalities. The economic value extracted from user data is unlikely to be evenly distributed across all individuals. Younger, more affluent populations tend to share more data through digital services. They could stand to profit far more from data monetization, raising concerns over fair access to the economic benefits of user data.
Individual data monetization also implies that consenting users take full responsibility for any problems. But real informed consent is difficult, with many unable to reasonably understand or predict consequences. Users could inadvertently sign away data, leading to exclusion, embarrassment or identity theft.
There are also societal impacts to consider. Normalizing individual data sharing for money could nudge more people to commodify personal information overly. Some warn monetization incentives could encourage irresponsible oversharing. There are concerns it could escalate a digital culture centred on data exploitation.
The Role of Web3 in Safeguarding Data Ownership
I still believe decentralized internet models like Web3 could mitigate risks tied to individual data monetization. And with the wealth of on-chain data available, touching on everything from protocol use to financial movements, user data that de-anonymises transactions becomes 10x more valuable as a context key.
Web3 aims to transfer power from large tech platforms to users through blockchain, encryption and token-based economics. It could allow individuals to control the monetization of personal data through smart contracts, with payment flowing directly to users. Intermediary data brokers are cut out.
Decentralized apps built on Web3 promise to enhance privacy and security. Encryption and blockchain ledger technology make it far easier to track data sharing while keeping personal details private. Users could selectively disclose information and audit its use, accepting payment via instant crypto txns and choosing when and where to de-anonymise their on-chain information. This isn’t science fiction; Brave Browser already offers users $BAT tokens in exchange for interacting with advertising, and the evolution from here to personal data monetization asks for more of a tweak than a leap.
New data cooperatives are emerging on Web3. These member-owned groups can negotiate collective data-sharing terms that protect individual rights. Data trusts deploy user information only for democratically agreed purposes.
With inherent transparency, security and collective ownership, Web3 provides the architecture to share personal data while minimizing misuse. Users can benefit economically from data sharing without surrendering all control over privacy.
Data monetization is a complex issue with merit on both sides. Individual control of data monetization offers a clear economic upside. It could mean revenue, personalized services and consumer empowerment. Significant risks exist, like privacy erosion, inequality and manipulation. Realizing the benefits while mitigating the pitfalls will require thought and care.
Web3 models appear to hold promise in balancing open data sharing with individual rights. The tech remains new and unproven on a large scale. Progress is still needed in the governance, accessibility and security of Web3 systems.
What does seem clear is that personal data holds tremendous latent value. What we do with it now will shape the future of individual choice and autonomy.