Data capital, or: data as common tender

Legal TenderWikipedia states that … is payment that, by law, cannot be refused in settlement of a debt denominated in the same currency. , in turn, is a unit of exchange, facilitating the transfer of goods and/or services.

I was asked a question earlier today about the relative value of open services against open data served in open, non-proprietary data formats. It got me thinking whether — in the pursuit of utter openness in web services and portability in stored data — that’s the right question. Are we providing the right incentives for people and companies to go open? Is it self-fulfilling or manifest destiny to arrive at a state of universal identity and service portability leading to unfettered consumer choice? Is this how we achieve VRM nirvana, or is there something missing in our assumptions and current analysis?

Mary Jo Foley touched on this topic today in a post called Are all ‘open’ Web platforms created equal? She asks the question whether Microsoft’s PC-driven worldview can be modernized to compete in the network-centric world of Web 2.0 where no single player dominates but rather is made up of Best of Breed APIs/services from across the Web. The question she alludes to is a poignant one: even if you go open (and Microsoft has, by any estimation), will anyone care? Even if you dress up your data and jump through hoops to please developers, will they actually take advantage of what you have to offer? Or is there something else to the equation that we’re missing? Some underlying truism that is simply refracting falsely in light of the newfound sexiness of “going open”?

We often tell our clients that one of the first things you can do to “open up” is build out an API, support microformats, adopt OpenID and OAuth. But that’s just the start. That’s just good data hygiene. That’s brushing your teeth once a day. That’s making sure your teeth don’t fall out of your head.

There’s a broader method to this madness, but unfortunately, it’s a rare opportunity when we actually get beyond just brushing our teeth to really getting to sink them in, going beyond remedial steps like adding microformats to web pages to crafting just-in-time, distributed open-data-driven web applications that actually do stuff and make things better. But as I said, it’s a rare occasion for us because we’ve all been asking the wrong questions, providing the wrong incentives and designing solutions from the perspective of the silos instead of from the perspective of the people.

Let me make a point here: if your data were legal tender, you could take it anywhere with you and it couldn’t be refused if you offered to pay with it.

Last.fm top track chartsLet me break that down a bit. The way things are today, we give away our data freely and frequently, in exchange for the use of certain services. Now, in some cases, like Pandora or Last.fm, the use of the service itself is compelling and worthwhile, providing an equal or greater exchange rate for our behavior or taste data. In many other cases, we sign up for a service and provide basic demographic data without any sense of what we’re going to get in return, often leaving scraps of ourselves to fester all across the internet. Why do we value this data so little? Why do we give it away so freely?

I learned of an interesting concept today while researching legal tender called “Gresham’s Law” and commonly stated as: When there is a legal tender currency, bad money drives good money out of circulation.

Don’t worry, it took me a while to get it too. Nicolas Nelson offered the following clarification: if high quality and low quality are forced to be treated equally, then folks will keep good quality things to themselves and use low quality things to exchange for more good stuff.

Think about this in terms of data: if people are forced (or tricked) into thinking that the data that they enter into web applications is not being valued (or protected) by the sites that collect the data, well, eventually they’ll either stop entering the data (heard of social network fatigue?) or they’ll start filling them with bogus information, leading to “bad data” driving out the “good data” from the system, ultimately leading to a kind of data inflation, where suddenly the problem is no longer getting people to just sign up for your service, but to also provide good data of some value. And this is where data portability — or data as legal tender — starts to become interesting and allows us to start seeing around through the distortion of the refraction.

Think: Data as currency. Data to unlock services. Data owned, controlled, exchanged and traded by the creator of said data, instead of by the networks he has joined. For the current glut of web applications to maintain and be sustained, we must move to a system where people are in charge of their data, where they garden and maintain it, and where they are free to deposit and withdraw it from web services like people do money from banks.

If you want to think about what comes next — what the proverbial “Web 3.0” is all about — it’s not just about a bunch of web applications hooked up with protocols like OAuth that speak in microformats and other open data tongue back and forth to each other. That’s the obvious part. The change comes when a person is in control of her data, and when the services that she uses firmly believe that she not only has a right to do as she pleases with her data, but that it is in their best interest to spit her data out in whatever myriad format she demands and to whichever myriad services she wishes.

The “data web” is still a number of years off, but it is rapidly approaching. It does require that the silos popular today open up and transition from repositories to transactional enterprises. Once data becomes a kind of common tender, you no longer need to lock it; in fact, the value comes from its reuse and circulation in commerce.

To some degree, Mint and Wesabe are doing this retroactively for your banking records, allowing you to add “data value” to the your monetary transactions. Next up Google and Microsoft will do this for your health records. For a more generic example, Swivel is doing this today for the OECD but has a private edition coming soon. Slife/Slifeshare, i use this and RescueTime do this for your use of desktop apps.

This isn’t just attention data that I’m talking about (though the recent announcements in support of APML are certainly positive). This goes beyond monitoring what you’re doing and how you’re spending your time. I’m talking about access to all the data that it would take to reconstitute your entire digital existence. And then I’m talking about the ability to slice, dice, and splice it however you like, in pursuit of whatever ends you choose. Or choose not to.


I’ll point to a few references that influenced my thinking: Social Capital To Show Its Worth at This Week’s Web 2.0 Summit, What is Web 2.0?, Tangled Up in the Future – Lessig and Lietaer, , Intentional Economics Day 1, Day 2, Day 3.

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Author: Chris Messina

Product guy, friend to startups, inventor of the hashtag, proponent of bots and conversational apps; Xoogler and X Uber.

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