How to sell personal data, or why it is difficult to hang the price tag on the information

    The backbone of the Internet is the users who spread more and more personal information on the network, and IT companies that use this information to create new services and improve existing ones.

    The discussion about how much this data is worth is actively expanding. We understand why companies use PD users and whether they can be made (one way or another) paid.

    / photo by Kevin Dooley CC

    Paradigm shift

    For a long time, personal data shared by users on the Internet remained free for companies. The question was only how to collect, analyze and use them.

    Now this narrative is changing. Regulators limit the possibilities of IT companies and expand the rights of users: they introduce new laws that give users greater control over the information they provide. As a result, users begin to understand that information has a price, and behind virtually any action they perform on the Internet is some form of manipulation of their personal data.

    This ceases to suit users - many polls conducted in 2018 show that there is a growing discontent in society about how companies deal with PD.

    Angela Merkel said not so long ago that it was necessary to “hang up the price tag” as soon as possible on the personal data of users . She proposes to consider them from a legal point of view as materials for doing business. The goal of this initiative is to reduce the gap between the traditional business and the IT sector and increase the understanding of the value of personal information.

    But from the point of view of data economics, information is difficult to describe, to conclude in a strict conceptual framework. It can be used almost infinitely many times, unlike, for example, natural resources. Moreover, in certain cases, information is transformed from a resource into a result of labor, and this is another separate field for technological and legal discussions.

    How much are PD

    Data on age and location, user search history are the pillars of the multi-billion Internet advertising industry. For example, only in 2017, contextual advertising brought Facebook 40 billion dollars - 49% more than a year earlier. However, it is quite difficult to adequately estimate the cost of information for each individual user of a service (in currency).

    Researchers from the University of Rochester, based on the number of page views with ads, calculated that on average, the cost of behavioral information per Facebook user in 2016 was $ 47 . However, users themselves (from the USA, Great Britain and Germany) estimated their personal data at $ 150.- This is an average of three thousand respondents surveyed by Syzygy research company in May 2018.

    At the same time, a third of the respondents from the United States are ready to be content with only 25 dollars. And 67% of Germans, 52% of Englishmen and 55% of Americans said that they would not sell their data for any money, even to their favorite brands.

    In other words, determining the real and fair price of information is a separate major problem, since all users value it differently.

    Another pressing issue is the process of payment and the organization of technology for the exchange of information for money. One solution in this area is DataWallet., an app for selling your personal data. Each user chooses which information he is willing to share (for example, place of work, but not his birthday) and from which source (for example, Facebook or Twitter). The application collects all data, removes all personalization (email address, name, and so on), combines them into analytical reports. These reports go on sale, and data brokers can buy them. The application then distributes the proceeds from the sale among all users whose data is included in the purchased report. On average, a user can get from $ 1 to $ 50 through DataWallet.

    Another option is to exclude the “intermediate link” and offer the “IT services” to “buy” their personal data from users. However, in this case, the amount of compensation is unlikely to be significant (for example, if Facebook will share its income among all monthly users, then everyone will receive about $ 9 per year ). Moreover, this strangely affects the economy of the IT sector: now many of the services on the Internet are free (as opposed to offline business), and within this model they will also have to pay extra to users.

    Future machine learning

    Today, in many cases, every decision or user action — like in social networks, file upload, search query, interaction with an advertisement — is a unit of information for machine learning algorithms that underlie any IT business. It turns out that surfing the Internet turns into a kind of work, which, however, it is not known how to track and pay.

    / Photo Best Picko CC

    One of the possible solutions, experts say, is history suggests the creation of “labor unions of informational labor” who will communicate with companies, negotiate rates, prevent offenses and monitor the quality of information.

    If such a concept, seemingly something of science fiction, somehow comes to life, IT giants will lose some of the profits, but are likely to gain in the long run. The organized market of “information labor” will generate a regular stream of better information, thanks to which algorithms can become even better.

    Hang the price tag is not easy

    In one place on the personal data for a long time hung up the price tag. This place is Dark Web, and the information available there is significantly different from that in which advertising exchanges and brands are interested. There you can get much more important information than gender or marital status: from these driver's licenses to passwords from credit cards.

    As noted in the analytical agency Experian, the price for medical information can reach thousands of dollars, and for these passports they can ask for two thousand.

    For the “bright side” of the IT sector, the price of personal information is an open and new question. It is connected not only with technologies and economics, but also with patterns of user behavior, habitual consumption of information, status quo in the relationship between Internet services and those who use them.

    So far, all the talk about the assessment of users' PD remains just talk. However, if it comes to legislative regulation, then you should carefully consider all the provisions and acts, because it will affect the basics of the Internet, to which everyone is accustomed.

    PS Materials for additional reading from the First Corporate IaaS blog:

    The main direction of our activity is the provision of cloud services:

    Virtual Infrastructure (IaaS) | PCI DSS Hosting | Cloud FZ-152 | Rent 1C in the cloud

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