[archive] How data (value) is created on the Web

In light of recent developments regarding privacy, mass surveillance, AI and general misunderstanding of the Internet, AI and the Web, I decided to revive some of my old blog posts. This is a re-print of a post that has been originally published on my blog on 9th of April 2010.

Many words have been written already about data. Data is everywhere. Data is the next big thing. Data is the value on the World Wide Web. In this post I investigate how data contributes to the process of generating value on the Web, and how it is the crucial component of this process. The model that is presented here may not be too sophisticated, but it helps gain the basic understanding of why some services work, and others don’t. It is also an attempt to explain why some data exchanges are realistic to happen, while others will probably never happen.

If your service has data, you have power. You can sell access to your data (like Twitter used to), or you can build valuable service to users, and show ads. If you look at the Google‘s service, what it has is this marvellous Web index (data). Based on this it offers a very useful search service, and gets a revenue through ads. Google got its data through the use of Information Retrieval techniques, which sounds a little baroque nowadays. New ways exist to harvest data. Users can do it for you. Crowd-sourcing is nothing new. The real question is how to make people engage in crowd-sourcing and leave you their data. You may also gain data by taking it from another service on the Web. Here I construct a more general scenario that unifies all those modes of acquiring and using data.

The most important to understand is that data is what powers all services provided on the Web. Based on data (web index in the case of Google, user data in the case of Facebook) you can provide useful things to users so that they come and interact with your service. Data is the essential resource that coupled with good interaction design, contextuality and other values makes truly relevant Web services. So users come on your website, benefit from the service and can pay for it in three ways:

• by leaving new data (filling out profiles, posting tweets, comments, marking favorites, editing maps, creating Foursquare locations and annotating them etc.);
• by attention to advertisements;
• by paying money for the service.

In the first case you acquire more data and make your service richer. Coupling of this kind of payment with one of the others is needed to make the service alive and make it grow.

Once we have accepted that data has value, we can ask ourselves what interest there is for a website to share its data with other websites. Instead of just keeping data for themselves, websites may share data in order to get more data. Twitter for instance allows you to almost fully replicate its functionality by taking over the data, but as a result, it acquires new data through third party interfaces. Since for Twitter data=value, then a decision to open to a certain degree in order to become the aggregator for data is quite economically rational.

Services open their data and engage in interactions with other services whenever those interactions can be payed off (through data or other means). Facebook is ready to give social graph data to other services based on the hope that this utility will make it a de-facto address book for most users, in which case it would just gain more and more data.

In the next blog post we shall see what are the motivations for users to leave their data to a service on the Web; and later we will consider the reasons why other services might be motivated to contribute data.