The Startup
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The Startup

What if Facebook had to pay you for the profit they are making?

Over the past two decades freemium (a combination of ”free” and “premium”) has grown rapidly in popularity; it is the dominant business model among internet start-ups. A monetization method in the freemium model is that of selling user data. This practice has become commonplace among a wide array of freemium products. Monetizing their users’ personal information instead of charging a fee has become an established revenue model. Jaron Lanier, the “founding father” of virtual reality, argues that “people need to be paid when their data is used”.

“Whenever you are offered something for nothing remember that mice die in traps because they don’t understand why the cheese is free.” — Jameson Lopp

Depending on how one chooses to look at the literature, reinventing the business model to meet customers’ needs, distinguishes the most successful companies from the rest: Companies may decide to innovate in terms of how they approach markets; For example, Facebook may decide that it really should move into giving control of data to users so that they can earn money from what until now they were giving away for free.

In 2019, Facebook sold $31.9 billion of users’ data as targeted ads. This figure was up from $1 billion of earnings in 2011 and $600 million in 2010. Advertising revenue accounted for more than 80 percent of the business in 2011. In the first months of 2019, it accounted for 98.66% of its total revenues. Users get the service for free and Facebook owns the data which gets sold in the form of targeted advertising.

But what if Facebook had to pay you for the profit they are making?

Facebook, Google, and other big tech companies have exploited a cultural understanding that when one uses internet services as a consumer one doesn’t “work” by supplying data despite the great value of the data for the internet companies.

Have no doubt about it. Data creation is labour. And internet users should be able to generate economic benefits and rewards from the data they share in Social Media platforms.

But how much is your personal data worth?

According to the Financial Times Personal Data Value Calculator, the data of the average American was worth between $0.20 and $0.40 in 2013. The average American’s data retailed for less than a dollar in 2017 according to the same source. People who sold their data via Datacoup in 2017 earned no more than $2 per month. It doesn’t come as a surprise then that a user’s location worth just a penny in Datum: Datum, a decentralized marketplace for personal data that was founded by Gebhard Scherrer and Roger Haenni in 2017, advertised that it would allow people to sell their location for 1 DAT ($0.01) per month. As of the time of this writing, the Datum ID app is not working as intended, so don’t bother asking for your penny.

If there was more money to be made, people would care about the use of their data.

The truth is that every year, we create an excess of $2,000 directly from personal data. Based on this data calculator, Facebook makes over a thousand dollars a year just from my profile page.

Datum’s Data calculator

Trading your personal data

Datum is not a new player in the data trading business. There is already a world wide data-market enabled by various data brokers who collect a huge volume of detailed information on hundreds of millions of consumers. Acxiom claims to have files on 10% of the world’s population, with over a thousand pieces of information per consumer. Facebook, a long-time friend of data brokers, reportedly ended its practice of offering anonymized user data to data brokers in 2018. At about the same time, the EU introduced the General Data Protection Regulation (GDPR) and ePrivacy Directive (ePR) to put more onus on data brokers and ensure users understood how their information was being used.

The GDPR has extra-territorial scope, which means that websites outside of the EU that process data of people inside the EU are obligated to comply with the GDPR.

As long as the biggest volume of personal data is still collected by services, such as Facebook, data will not have enough value to be traded for the benefit of their owners. This is the reason why the data added in Datacoup was never sold.

A revolution for the ownership and control of data

About five centuries ago, people saw themselves in relation to the land in feudal societies. They now position themselves in relation to the internet and the data they produce and own. People have become more and more dependent on data; Society moves forward by means of production, as Marx noted 162 years ago in The Communist Manifesto, and these means today are the data.

I think a lot of people have this feeling like “Wow, this is not the world that needs me.” — Jaron Lanier

Facebook needs to recognize the will and strength of their free users; With a worldwide total of 47 zettabytes of global data in 2020 and the amount of data being created and stored at unprecedented rates, “overworked” Facebook users will eventually develop a sense of ownership and control. In the same manner as the overworked and underpaid workers of the 19th century guided a socialist revolution, a new revolution can erupt for the ownership and control of the data.

Paying people for data may as well prevent a revolution. And the way forward is for Facebook to adopt, at least, an experimental stance toward business model innovation. To cite a well-recognized cliche, “In God we trust, others must bring data.”

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