Amidst growing public perception that Facebook is using us to make billions of dollars using data we’re freely posting online, there is another sinking suspicion: Web startups we don't keep a closer eye on are monetizing all of our personal data behind our back. Each of us is generating an incredible amount of data on our PCs, laptops and mobile devices each day – whether it’s checking in, liking something online or conducting a search – and all of this data has value for advertisers and marketers. The more they know about you, the more they can sell you. As a result, we need to ask: Who owns our data, and just exactly how much is it worth?
Consider that Google - a company that made its billions with the motto of "Don't Be Evil" - is now caught in a very public flap over its use of private data and its stance toward user privacy. Starting March 1, Google will be able to track your personal data across any product or service in the Google ecosystem, from Gmail to YouTube to Google+, all without having to ask your permission. Once you've logged in, all your data are now belong to Google.
Mobile social network Path, rumored as a potential successor to Facebook as king of the social networking world, was found to be uploading the full address books of its users for reasons that still are not apparent. Even after a full apology by the company's CEO, users defected in droves. This was followed by Pinterest acknowledging that it was skimming users’ links to products and replacing them with affiliate e-commerce links – all without telling anyone. Essentially, Pinterest had found a way to pocket some extra money anytime someone made a purchase based on an item that had been posted ("pinned") online. Even Apple, beloved by tech aficionados, came under fire last year for storing GPS tracking data on iPhone users.
Obviously, if all of these companies are so desirous of having access to our personal data, it's worth something, eh? There are countless numbers of ways to compute the theoretical fair market value of our private information if we actually tried to sell it to advertisers. In the case of Google, the number suggested by Smart Money was close to $5,000 per user, each and every year that we use Google's products. In the case of Facebook, one could make the argument that, if the company made $3.2 billion last year by selling advertising based solely on the personal data of its users, then each user is theoretically responsible for at least a portion of those earnings.
Where these valuation attempts go wrong, however, is in making the fundamental assumption that everyone's data is worth the same amount of money. Some people are just more valuable to advertisers – because of their demographic, their income, or more ambiguously, the level of their influence on the Internet. Yes, sorry, the personal data of Justin Bieber – the world's most influential person when it comes to anything Internet-related - is most likely worth significantly more than your own personal data.
What's exciting is that a number of innovative startups are acknowledging that there is an explicit, not implicit, link between private data and real-world value. Until recently, the problem was finding a single currency that all of us could use to compare our value. For now, that single currency is “influence,” whether measured in Klout points or some other metric. It's time to realize that companies like Facebook don’t get to 800 million users without the help of all the little people out there. Which brings us to the example of Wahooly, which is still in super-stealth mode, having launched only a few months ago. Wahooly essentially offers influencers the chance for equity participation in startups for their help in getting a fledgling company off the ground. It’s sweat equity, updated for the digital era.
Last May, Gordon Crovitz of The Wall Street Journal made a provocative statement, “If you're not paying for the product, then you're not the customer—you're the product being sold.” Indeed. Just as all the cool Internet sites that we use for "free" are finding ways to make money from all of our personal data, Internet users need to wise up and realize that their personal data has real-world value. In the future, just as we measure our wealth in terms of financial assets and real estate, will we one day throw our personal data into the mix as well?
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