Personal Data: A New Asset Class?

Cathy Betz
Written by Cathy Betz
on April 22, 2011

“Personal data is the new oil of the Internet and the new currency of the digital
world.” Meglena Kuneva, European Consumer Commissioner, March 2009

As we move towards a “Web of the world” in which mobile communications, social technologies and online connections are bringing people together into one interconnected network, personal data may soon emerge as “a new asset class,” according to a fascinating report recently released by Bain & Company, in collaboration with the World Economic Forum (WEF PersonalDataNewAsset_Report PDF).

Data, Data Everywhere

The amount of data generated by today’s digital society is astounding. Data is being collected on who we are, who we know, where we are, where we have been and where we plan to go. Mining and analyzing this data give us the ability to understand and even predict where humans focus their attention and activity at the individual, group and global level, the report observes.

This personal data – digital data created by and about people – is generating “a new wave of opportunity for economic and societal value creation,” says the WEF. The types, quantity and value of personal data being collected are vast, from our profiles to our bank accounts, from our medical records to our employment data, from our Web searches and sites visited to our likes and dislikes and purchase histories. Data from our tweets, texts, emails, phone calls, photos and videos, as well as the coordinates of our real-world locations are all being collected and analyzed. The list continues to grow.

A Hot Commodity

Collecting, aggregating, analyzing and monetizing using personal data – in an endless variety of ways – is big business. Companies collect and use this data to track product use and support their business models. Governments employ personal data to provide critical public services more efficiently and effectively. Researchers examine data to develop new drugs and treatment protocols. And, end users benefit from this activity through free, personalized consumer experiences such as Internet search, social networking or buying recommendations.

The largest social network, Facebook, is reportedly looking to cash in its mother lode of personal information by helping advertisers pinpoint exactly whom they want to reach. This is no idle boast. Facebook doesn’t have to guess who its users are or what they like. Facebook knows, because members volunteer this information freely – and frequently – in their profiles, status updates, wall posts, messages and “likes.” It’s now tracking this activity, shooting online ads to users based on their demographics, interests, even what they say to friends on the site – sometimes within minutes of them typing a key word or phrase.

Personal data is “becoming a new type of raw material that’s on par with capital and labor,” says Bain & Company. “Personal data will be the new ‘oil’ – a valuable resource of the 21st century.”

You Can’t Just Hit the ‘Pause’ Button

There is no question about the value of data as an asset.

But, the rapid rate of technological change and commercialization of personal data raise many concerns. The report maintains that current technologies and laws fall short of providing the legal and technical infrastructure needed to support a well-functioning digital economy. Fundamental questions about privacy, property, global governance, human rights – essentially around who should benefit from the products and services built upon personal data – all need to be addressed in order to tap into the real value of all that data.

Something to keep in mind each time we “click” away.



Comments

There have been made comments on this article

  1. Why not incentivize the user/consumer to provide their information in exchange for reasonable compensation? This model is not new but quite frankly it hasn’t been fully explored. Now is the time. Companies pay $billions$ per year for our personal data and we get nothing but entertainment and games. Why not get real cash money as well? We’re not talking pennies we’re talking real dollars for very simple data. Companies have a lot of this data already but it’s usually inaccurate or inferred. Companies like http://www.PinfoB.com and http://www.i-Allow.com are stepping into this marketplace to give the consumer the bulk of the rewards.

  2. Ruud Kluivers on at

    Very interesting post, if Personal Data is predicted to be the oil, a valuable resource of the 21st century people should be aware the new oil companies are called FaceBook and Google. These companies apparently offer ‘free’ services. But are they? “If you are not paying for it, you’re not the customer; you’re the product being sold.”

  3. Ornella on at

    Thank you for your post, Cathy. I do agree with your last point and with Ruud comment. How can we react to this? What can we do to prevent possible abuses? Should we just ask for data canceling and unsubscribe to those sites?

  4. Cathy Betz on at

    A variety of bills are being debated in Washington now that would create some new rules for how to handle data and privacy in the digital age. Observers are already saying the one proposed by Sens. John Kerry (D-MA) and John McCain (R-AZ) has the best chance of passing. It’s a bipartisan bill with support from several large corporations, including Microsoft, Intel, and eBay. It’s not an online privacy bill—the bill’s provisions apply equally to companies on and off the internet, but it calls for an opt-out for all information, and an opt-in for some sensitive information. Right now, offering opt-outs from things like online tracking is certainly considered a best practice by reputable companies, but it isn’t the law of the land. This bill would make it so. And companies would have to give “robust and clear” notice that the opt-out was available. For some sensitive information, consumers would have to affirmatively give their consent by opting in. You are all correct, though, data is king and equates to big money.

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