Commercial aspects from privacy research

I was reading recently a book "Internet policy and Economics", this book contains an essay, 7th Chapter, which comes from a Berkley professor, H. R. Varian (who is currently chief economist of Google)

He presents an economics solution to the privacy problem. The idea or concept is simple, let people trade(lease) their private data but not third parties (which is the current scenario). So, there must be a legitimate organization which let people buy others data and let people sell their data. (I think that it will kill majority of spammers and other people involved in identity theft business)

If you will read the chapter (which is quick and easy read) , you will find that the idea was first described by Laudon in 1996 (landmark paper: http://portal.acm.org/citation.cfm?id=234476 ). Laudon proposed this idea in firstplace proposing a National Information Market.

I am part of a social media platform project known as OtaSizzle, and I am researching the privacy area in the platform. To me connecting the dots from the book and the project, points out an obvious demand coming out for a service, which sets up the market place for anonymous trade of user information. Where the users data is collected at one place and is transparent to Users, about what is being collected and setting up of a market place where buyers can bid for user data.

For example: The obvious customers in Finland or elsewhere would be the retailers/marketers to send directed/personalized advertisement, not SPAM! So, service could provide a mailing list to retailers for their target audience, which do not show them who is subscribing to them but they know how many subscribers are there. They have to pay service provider a fee to post to the mailing list. A part of which is passed on to the users who have opted into disclosing their data to the marketplace (service provider) to enable this kind of transaction possible.

For example: All the users who are part of group Apple :Mac Products, might be of interest to MacStore for infroming of new available discounts. MacStore has to pay to post to users, earnings would be shared with users. So, the users are involved directly in value chain. Also, their data does not go into hands of people they do not want (which, is the current case)

So users get paid for participating in the service and also reduce their transaction cost. This is similar to loyalty cards but linked to the online activity.

In past many companies have been created, which makes spyware/adware but does not include user in the value chain. One such example is Double Click, which was recently bought by Google for ~3 billion dollars. Also, in many cases such companies can be accused of being illegal.

I see this as a radical change (if we can do it or somebody else). That instead of trapping users in EULA's we let users decide whom they want to sell and at what price their own data.

Many people who will read this piece, will obviously criticize it for:

The concept has been around for quite sometime (since 1996), why there is no such service?

I would say that we have it indirectly when the essay comes from the chief economist of Google,Google must be one to do it. Google is the one obvious implementer of this concept. They have shifted the cost of services like Gmail etc to advertising. People could control to a little extent what Google stores about them and Google has created a market place for advertisers where they bid for advertising to users, without knowing the users.

However, I would say even though Google has created the marketplace from advertisers point of view but a more choiceful market from users point of view does not exist. Users get control of their data but they still have to rely on the price set by Google not market place (maybe indirectly through competition with MSFT or YAHOO, features and storage space). They get free services and nothing else. They are part of value chain but they must get more, after all it is their data, which gives Google record profit !

Also, last but not least Google has created a market place for web for the advertisers but still their user side is not touching everybody in everyform. (Search and other services are quite widespread but still there is a scope).

I would say an independent service would be more suitable which could sit on your "machine /browser" in form of a " browser plugin/desktop client/cloud service " which eats all your usage data across the services (Facebook, Google, MSFT etc) and then users choose whom to share with their data and at what price.

Last but not least, living in Finland, I must relate it to Nokia too! With the recent announcement of Nokia Money Service, I see an amazing opportunity for an ecosystem to be created on top of this payment service. Where users can opt in for a similar version of mobile service/software which can help them trade their usage data with retailers. My guess is Nokia must be very happy to work with such a startup, as it will bring down the transaction cost of users using Nokia Money, by bringing better targetted discounts/offers.

For those who like this idea, I would appreciate comments/suggestions. Or if somebody wants to take the concept for a startup that would be even better!

2030: How does the energy sector changes: a story about everyday activity of Oskar

For one of postgraduate course I need to do a scenario about user driven innovation in energy sector by 2030.

Assumptions: I will be using certain assumptions based on some facts and figures from various sources.

1. Rise of fun and game approach, in how we do things.
- example at http://thefuntheory.com/

2. Rise of ICT usage in non-ICT fields.
- A report from ericsson claims that ICT usage in non-ICT sector can bring down CO2 emissions as much as by 15%. Where as ICT CO2 emissions itself accounts for 2% usage currently. The report mentions also about overhead, which is also important to know. It estimates for telecom sector that an input of 1 kg CO2 emission might bring saving of 10-100 kg elswwhere. So, if we were to do a vague calculation of overhead then a rise in 1-2% of ICT contribution by ICT might bring a reduction of upto 15% elsewhere. Which means that we are still saving 13%.
Link for the report.

3. Rise of connectivity :(Social Media, Mobile and Internet Usage and data transperancy)
- A recent article I read about how people change behavior for good because peer information was provided to them. (The researcher calls it "Social Proof"). To me it is inevitable that we will see more of this. Some quick numbers, 300 million users on Facebook , 4.2 billion mobile users world wide. We have a grwoing platform, once we have most of us onboard, we will have a much wider impact on how we can do things collectively. There is no doubt that Social Media is a big enabler here and technology that will enable us is Internet on mobile.

There is a trend in data transparency like : Pachube is a website where companies like Helsingin Energia have published their feed about energy usage in real time. Link

If we were to think of a world 20 years from now, then we can definitely assume significant progress in many of the technological fields. So, it will not be wrong to assume a world which is much more connected(not only humans to humans but humans to things and things to things), ubiquitous information (democratic nature of information because of the DNA of Internet), Smart materials ( Like: Wall paints which can sense, display and connect to Internet etc)

An example ICT application: http://www.ted.com/talks/pattie_maes_demos_the_sixth_sense.html

Some Jargon/Building Blocks

Future Device: FD: A device which is a gadget pretty much everybody in the world has in 2030. It has ability to connect to everything, you can not only call friends, but connect to any thing which is around the world. Say, your FD can read the energy usage pattern of your friends car and you can show him how smart you are compared to him.

It also reminds me of the term SPIME coined by Bruce Sterling.

Not only our FD will have that capability but pretty much everything which is manufactured will have this nature of remembering its usage and tracking its history. So, everything in market will be a SPIME.

Major energy companies are out of business and they move to ICT enabled energy intelligence or manufacturing portable energy generators:

• Consumers are now using their own energy sources, some communities use their own nuclear/solar/wind plants.
• People also donate energy to needy collectively.
• We have all the major energy companies out of traditional business of energy distribution and productions, they have to shift their business to R&D in intelligence of energy usage. They have now shifted their focus to build ICT applications which can be downloaded to your FD.
• End to end usage of ICT solutions: People can not only read the energy usage using their FD but send that to friends and those friends then can download that usage pattern and dictate their devices to behave in that way. For example: If Oskar wants his Laptop to use same power management profile as his friend, who happens to run it most efficiently. He just touches his FD to his friends FD while they are discussing about it. Bingo his laptop is now as efficient as his friends. This was possible because both of them had an application downloaded from the Energy app store provided by Helsingin Energia.
  

The Story:

5th June 2030: A day in life of Oskar

07:00 AM: Oskar wakes up in the morning. His waking up is detected by his bed, which inform other devices in house to start working, which are now needed. As they went to sleep too, like toilet water heater etc.

Oskar picks up his FD and realizes that it is world environment day. After he sees that in his calendar. He wants to be part of the action.

Since his utility company (who buys electricity from Oskar) and sells it to customers where they are still using less eco friendly ways to produce energy as it is cheaper for them. He decides to save some electricity by not running some of his home devices today. He can quickly calculate that which devices are optional using his FD, which is connected to home power meter and can detect those devices for him.

08:30 AM: Oskar is now ready to leave for office and he has now dictated his house devices to be shut off, so that some electricity which is saved could be donated to grid. He thinks he has done a smart thing. So he uploads his workflow (which devices to be shut in a digital file) and uses a twitter like service to tell his friends about it.

09:00 AM: Oskar friends have liked the idea and they are also spreading news about it and many people are using the same file as sent by Oskar as they have a similar home device setting.

09:30 AM: Oskar is now looking for transport to his office, there are several transport companies in Helsinki. But he can choose which company is most energy efficient by just hooking his FD at the stop near his house. He gets the answer on his FD screen and ready to take the transport which is most energy efficient.


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06:00 PM: Oskar's utility company could route record energy to the main Finnish grid, because of the small movement started by Oskar in the morning. Which picked up in entire Helsinki region in no time.