Business has traditionally been constrained in how much money it can make for a given amount of effort. This is not only basic economics but it really forms the very periodic table of economics; since people have been selling goods or services, the amount of money they made was the amount people paid for them, less the effort and cost involved in producing them.
Throughout history there have been people who’ve bucked this paradigm. In the early 1900s an Italian entrepreneur pioneered a business model where he was freed of the cost and effort of having a product at all, and paid returns to investors from the buy-in of subsequent investors. Charles Ponzi’s innovative approach was incredibly lucrative to both himself and the second-most-recent wave of investors at any given time, but ultimately failed, and the United States Attorney for the district of Massachusetts assisted in winding up Ponzi’s scheme. Later attempts to reimagine the business model including by Bernard Madoff in 2008 have not managed to advance it to long term success.
While businesses such as these, and those of the gentlemen ringing your parents from a developing country offering urgent if mysteriously informed computer support, and the models of however many devoutly religious, medical school attending and capital letter wielding Nigerian princes all seem to run into regulatory trouble, there’s something alluring about them. It’s very tempting for Australian businesses in 2016 to survey the real estate, computer infrastructure, people, and all the other things comprising their business that they resent having to pay for, and lament how much this bites into the revenue they receive from the prices people are willing to pay for goods and services — themselves seemingly fixed with upper limits. You can solve lots of these cost problems; real estate through pioneering “office of the future” programs where you have very small or indeed no desks or amenities, or “teleworking” initiatives where costly floor space is literally off limits to people who work for you. Computer infrastructure is somewhat mitigated by “the cloud” where you trade having lots of computer equipment that you have to buy up front from people that make it, for computer equipment that was sold to someone else who charges you and lots of other people for every month. It’s broadly the same, but the bills are smaller and more regular. People costs are easy; someone in Australia to tell your customers on the phone that you are doing everything you can to ship them their product costs about $50,000 per annum, but someone to do the same thing in less confident English from somewhere like the Philippines costs down to about $5 an hour.
Costs are cut to the bone. Australian businesses have embarked on the better part of a decade engaging in an extraordinarily complicated arrangements to avoid investing in literally anything, places, stuff or people. They still aren’t extraordinarily successful though. You’d think with business costs being as close to nothing as is really feasible, Australia would be a hub of innovation and profits, and we’re anything but. Why?
The other end of the equation is why. It’s never cost less to sell, but how can we sell more for more?
Broadly speaking “big data” emerged as the principle that with costs as close to zero as they can really get, the only thing stopping the big end of town having two BMWs, is their decisions are insufficiently informed by computer systems (that other people run of course.) The zeitgeist coming out of the global financial crisis recovery, and strongly advocated by people selling products and services that enabled it, was that you are a Chief Executive Snowflake and if you just had a lot of numbers moved around on reports revenue would go up. No not just lots of numbers, heaps of them. Even the ones that probably only peripherally mattered. Your stock price fluctuated when a butterfly in Tokyo flaps its wings and there’s an IBM product and professional service offering which is a data whorehouse of wing flaps. Sign here.
Some people made more money, most didn’t. The ones that made more money may or may not have made it anyway, but the ability to crunch enormous volumes of statistics into data, and interpret or model that data into information, at a reasonably low price and within a reasonable period of time, was here to stay.
Big data 2’s title is “data commercialisation.” In the era where everyone can finally process information on a giant scale, predictably everyone would prefer to sell the information to someone else to do it. The work ethic of Australian business is never do anything that you can pay someone else to do, and certainly never pay someone else to do something if they are keen to pay you to have them do it. Under this model, rather than finger through the entrails of your customers trying to figure out why they won’t pay ever increasing prices for unrelentingly ordinary products and services, you can sell this data wholesale to your “valued partners” who you only recently met and they can figure out if it contains anyone who might buy their products too. Or anyone who is at risk of buying their competitors products who might reconsider if offered a token discount. Or any blondes. Or short people. Whatever.
Data commercialisation strategies are emerging or mature at heaps of Australian businesses, and they all follow some variation on this theme. The privacy concerns are as obvious as they are pointless. If you are a person with a bunch of features (earns $87,320 per annum, married, oppressive mortgage, photography hobby…) the value of those features to a business you don’t currently patronise as sold by one you do has an air of creepiness about it. Australian businesses of course are fresh out of damns to give about that creepiness, all they need is the information so they can put it in a wire bin out the front door with a “SALE” sign on it. If they have a rare flash of innovation where they have commercial value to add, they’ll match it with your sales history with them and charge 40% more for it.
The only unsolved problem is scale. Where can you get all the information about every Australian, and how can you match it to the commercial data you have about the ones that do business with you? How can you partner with your industry peers to match everything about everyone to what you all know about them?
The answer is the census.
Today is census day where every Australian will describe everything about their household to the government so the government can steadfastly ignore it and continue issuing coal mining licenses, thinking out loud about terrorism and refugees, and letting straight people get married. This is of very low commercial value to the ASX 200 without the names and addresses of respondents which the census has always collected but then binned once it had tallied up that everyone had responded properly, so this year the Australian Bureau of Investigation/Statistics is helpfully collecting it, and matching it up. Michael McCormack, the minister handed the snuggly but slightly pungent bundle of joy that is the 2016 non-anonymous census and wholly coincidentally the minister for businesses that would like to sell things, has defended this is in much the same way you defend against a monsoon by running through it with a newspaper on your head.
McCormack’s problem began when the outrage at the identified census spilled over the sides of Twitter where politicians are comfortable to completely ignore it. He’s now giving interviews on ABC radio about why senators are publicly decrying data mining the population and in-between the talking points reiterated like a skipping CD of yore, he’s let his motive slip. Silly man.
“I think we’re making far too much of this, names and addresses and privacy breaches,” he said. “Anybody with a supermarket loyalty card, anybody who does tap-and-go, anybody who buys things online, they provide more information indeed probably to what is available to ABS staff.”
Of course, he’s correct here. But what he’s conveniently leaving out is that the process of providing information to your supermarket, or an online merchant, is wholly voluntary and that isn’t going to let his portfolio stakeholders make serious bank and buy that second yacht. From the Sydney Morning Herald;
“Reminded that the census was compulsory, whereas Facebook and Twitter were not, Mr McCormack said the census had to be compulsory “to allow the government and the Bureau to track people, and for governments to get the raw data so that we can provide the sorts of infrastructure”
Track people? Christ Mack your people specifically told you to avoid using the words track or stalk or smell her hair without her noticing in the media. Nevermind we’ll brief again before The Project.
The census is remarkably clever, not for its status as the most recent and most severe ignoring of privacy by the government but because of its status as an initiative to turn the federal government into the biggest monopoly provider of consumer data sets in the country and maybe the world. On the other side of the 2016 census will exist a data set of every Australian, able to be matched with commercial purpose data sets and used for any purpose. Of course this is currently illegal, which will stop it happening in much the same way that the criminal code provisions against murder have made Australia the only country in which people are not murdered.
In the next few years you’ll spend the cooling off period of your every purchase that has one, being bombarded by competitors urging you to reconsider. You’ll pay less for the gym because the gym knows you’ll never go and will set prices low enough for you not to bother making the cancellation call. You’ll be bumped from overbooked flights because you’ve never complained to any of the airline’s partners about the poor service you received from them. You’ll pay more for your electricity because you can probably afford it, less for vegetables because you can’t cook, your insurer will make decisions based on everything about you and everyone that lives in your block. Big data and commercialisation is here, everyone will make money off it (by everyone I of course mean your bosses, who are your bosses until the recruitment industry association provides them with the report of the minimum people will tolerate in salary for your job) and you’ll do your data entry for it all in-between tonight and September. You, are about to play every hand of the economic game with your cards face-up on the table while corporate Australia stares at them and salivates. If you don’t and ignore the direction to complete the census from the chief statistician, you’ll be repeatedly fined until you relent. Get online on August 9 or get a fine.
I’m sorry if it sounds dystopian, but it is a dystopia. The laziness of Australian business only occasionally stirred by its sense of entitlement to effortless profit, has been bowed to. That, is why the census is compulsory, and why it is no longer anonymous.