If data is the new currency, how might consumers have agency over their value exchange?
- Strategic Visioning
Data, data, data-in the information age, digitalization has produced an explosion in the quantity, depth, and value of data of all kinds. Bernard Marr’s piece in Forbes “How Much Data Do We Produce Every Day -The Mind Blowing Stats Everyone Should Read” lays out the dizzying extent of global online engagement. Some highlights:
- Google processes 40,000 searches every second
- 456,000 tweets are sent every minute
- 16 million text messages are sent every minute
- 1.5 billion people are active on Facebook every day
The breadth and frequency with which we’re using the internet has produced vast amounts of data, and businesses have built varying business models around this 21stcentury resource. In an earlier blog “Exploring Big Data Business Models and the Winning Value Propositions Behind Them”, our Managing Director, Justin Lokitz, analyzed not only the models themselves (DaaS, IaaS, AaaS), but also the unique value propositions that drive companies employing those models to create, capture, and deliver value from that data. Big Data is here to stay (and grow), but who controls and owns that data is starting to become a larger question.
Who Creates and Who Benefits?
So, who’s creating all of this data? Simple: it’s customers – both consumers and businesses – as well as the devices we all use (i.e. IoT). And, of course, it’s businesses that harness this resource, process it, package it and sell it or employ it to sell more of their own products. In other words, it’s businesses that really control the resource and the value capture from that resource-and they are capturing A LOT of value. If we just take a look at some of the “Tech Giants” in Jeff Desjardins article “How The Tech Giants Make Their Billions”, we can get a sense of the scale at which companies are profiting from (amongst other things) data as a resource.
Facebook and Alphabet are maybe the most prolific “data-collectors” of the group, employing IaaS business models and generating $55 Billion and $116.3 Billion respectively from advertising which is targeted at users as a direct result of the data they generate on those platforms (and elsewhere). That’s not to say Apple, Microsoft and Amazon aren’t benefiting from consumer data either. Amazon in particular “is a leader in the collection, storage, processing and analysis of personal information of millions of customers”, and it uses that data to fuel its customer-centric approach through algorithms that market to consumers and encourage purchasing on the platform by presenting products that are customized to their preferences. And that’s just the right side of their business model-Amazon’s operations and logistics are powered by data as well. In 2018 they made $123 Billion in online sales.
There’s no doubt then that data is a very, very valuable resource, and that companies are capitalizing on that resource. In the current climate, data is effectively currency. But even though consumers, in large part, are creating this data, they have very little agency over how it is used, and even fewer ways to exchange data as a currency. That’s beginning to change though, and customers are becoming savvier. In November 2018, it was discovered that cyber thieves had breached Marriot’s system as early as 2014, and had stolen data on 500 million customers, including credit card numbers and expiration dates of 100 million customers. The fall out has had a heavy impact-there are currently several multibillion-dollar law suits being levied at Marriot, beyond the inherent damage to the brand image. Legislation has also caught up: GDPR (General Data Protection Regulation) began enforcement in Europe in May 2018, and CCPA (California Consumer Privacy Act) was passed in September 2018 and comes into effect January 1st, 2020. Rising consumer awareness and concern, combined with regulation, will drive change to how companies and consumers use and benefit from data. This shifting landscape also represents new opportunities, and the chance to create new business models.
BIGtoken-Changing the Model and the Game
Given the changing landscape, and given that data is currency, how else can customers be empowered to use their own data to create value for themselves? Some companies have gotten ahead of the curve and started to create new businesses around these questions. BIGtoken is a consumer managed data marketplace spun out from the performance marketing company SRAX. The concept was born out of SRAX’s realization that the amount of information they had access to and value they were creating from other people’s data was a problem. As a solution, the company launched an app, which uses blockchain technology to provide transparency and consumer control, where consumers own, manage, verify, and sell their own data. As opposed to a company controlling and profiting from data as a currency, BIGtoken delivers that control and value right into the consumers hands, and consumers have responded-the app acquired 11 million + users globally just 6 weeks out of beta. SRAX’s CEO Chris Migilino highlights how BIGtoken is “creating a whole new marketplace, and opening up a whole new avenue to do business” in his recent interview with Forbes. The platform’s strong traction suggests that the model of agency + data as currency increasingly resonates with consumers, and that there is room for more innovation in and around data.
What does the future look like? What other business models can be created from the changing environment? Imagine a future where companies like Netflix aren’t using Facebook to merely advertise to potential customers. Rather, they’re working with Facebook to bring users onto the Netflix platform by enabling customers to pay with “tokens” made from data they’ve sold through BIGtoken. In this scenario, Facebook would expand from being an advertising platform to a data platform with the ability to onboard customers to other platforms. Customers would have more incentive to sign up for new services without spending “hard cash”… rather they would use data as “cash” -a Data-As-A-Currency (DAAC) model. This is a very different multi-sided platform than the one that Facebook executes today. However, as the landscape continues to shift toward transparency, more (consumer) control and increased shared value among stakeholders, business models must also shift with these changes.
Business model shifts, have given birth to whole new sectors of the economy. For instance, the sharing economy has enabled customers to turn their physical property into revenue generating assets through platforms such as Lyft, Airbnb, and Splinster. If data can become “cash”, what other assets can customers create from their digital activities? What are the business models that would support the exchange of those assets? At BMI, we explore these kinds of questions, and then identify, unlock, and launch new opportunities for our clients and partners. Come explore the future with us, it’s happening now.
Interested in designing game-changing, industry-shifting business models like the one described above, join one of our masterclasses or bootcamps. We’d love to design with you!
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