Set The Data Free, And Value Will Follow

(NB: Much has been written and said on this topic, and this post is in no way complete. We’ll be exploring this issue and many others related to data at the Web 2 Summit this Fall).

Perhaps the largest problem blocking our industry today is the retardation of consumer-driven data sharing. We’re all familiar with the three-year standoff between Google and Facebook over crawling and social graph data. Given the rise of valuable mobile data streams (and subsequent and rather blinkered hand wringing about samesaid) this issue is getting far worse.

Every major (and even every minor) player realizes that “data is the next Intel inside,” and has, for the most part, taken a hoarder’s approach to the stuff. Apple, for example, ain’t letting data out of the iUniverse to third parties except in very limited circumstances. Same for Facebook and even Google, which has made hay claiming its open philosophy over the years.

And this trend is not limited to the large players. I currently have 302 photos locked up in a service called Twitpic. I’d very much like to export them into my iPhoto library, so I can mange them as part of the rest of my photo library. But the only way to do that is to “right click” on each and every one of those photos, copying them to my desktop. That’s several hours of work that most folks simply won’t do. When an enterprising coder wrote an automated script that exported photos from Twitpic to another service called Posterous, Twitpic blocked the program. That was about the time I stopped using Twitpic.

This trend, I predict, will become the petard upon which our industry will hoist itself over the next couple of years. Very well intentioned projects like DataPortability.org and others are working on this issue, but it’s largely hidden from public view and debate, because that debate has been framed as “Us versus Them”, where the “Them” are presumably evil and profit-driven companies who want to leverage our data for their own gain. (See the entire WSJ series as exhibit A in this debate).

So far, the approach companies seem to be taking boils down to this: The data we have is too valuable to let our customers understand it, manage it, and ultimately, do whatever they want with it. We’ll say soothing things, and we’ll let our users take some actions with their data – Facebook will let you authenticate using Facebook Connect on third party sites, for example – but we won’t let you take the data you’ve created on our services, put it in your own pocket (so to speak), and hand it over to other services and platforms such that those platforms can add value to your daily life.

In other words, if information is truly currency in today’s economy, so far the coins in your pocket are all from different countries, and there’s no global exchange mechanism. They’re only worth something in the nation in which they’ve been minted.

For example, you can’t pass your Facebook identity to a third party site so as to enable that site to serve you a better advertising experience. While Facebook insists that your Facebook data is, in fact, *yours*, it turns out it’s not yours if you want to use it to help a third party make money. In other words, it’s not really yours if it has true value to a third party. Which, in essence, means it’s only yours if it’s not valuable to anyone but you. But value is most often a social concept – something has value because a third person values it.

If the true value of the economy we are building is to be unlocked, that value has to flow unchecked from one party to another. Were this to be true, differentiation of services would migrate to a higher level of the stack, so to speak. Services would be considered valuable for what they did with data given to them by consumers, rather than by their ability to lock consumer’s data into their proprietary platform. New models would emerge to reward those services for adding that value, and those models would be both more robust, and far larger than the “one ring to rule them all” model currently at play.

As things stand today, our industry’s practices are gaining the attention of dead-serious regulators, spurred to potentially early lock down of how data is used based on an incomplete understanding of how value will flow through future economic models yet to be invented. (More on this in another post).

A generation from now our industry’s approach to data collection and control will seem outdated and laughable. The most valuable digital services and companies will be rewarded for what they do with openly shareable data, not by how much data they hoard and control.

Now, I live in the real world, and I understand why companies are doing what they are doing at the moment. Facebook doesn’t want third party services creating advertising networks that leverage Facebook’s social graph – that’s clearly on Facebook’s roadmap to create in the coming year or so (Twitter has taken essentially the same approach). But if you are a publisher (and caveat, I am), I want the right to interpret a data token handed to me by my reader in any way I chose. If my interpretation is poor, that reader will leave. If it adds value, the reader stays, perhaps for a bit longer, and value is created for all. If that token comes from Facebook, Facebook also gets value.

Imagine, for example, if back in the early search days, Google decided to hoard search refer data – the information that tells a site what the search term was which led a visitor to click on a particular URL. Think of how that would have retarded the web’s growth over the past decade.

Scores of new services are emerging that hope to enable a consumer-driven ecosystem of data. Let’s not lock down data early. Let’s trust that what we’re best at doing is adding value, not hoarding it.   

More on this in my 2007 post The Data Bill of Rights, not to be confused with the “Commercial Data Privacy Bill of Rights,” introduced last week. While well intentioned, this bill does not consider data ownership and portability.