The Economic Value of Data vs the Public Good? [2] Pay-for-privacy, defining purposes

Differentiation. Telling customers apart and grouping them by similarities is what commercial data managers want.

It enables them to target customers with advertising and sales promotion most effectively. They segment the market into chunks and treat one group differently from another.

They use market research data, our loyalty card data, to get that detailed information about customers, and decide how to target each group for what purposes.

As the EU states debate how research data should be used and how individuals should be both enabled and protected through it, they might consider separating research purposes by type.

While people are happy for the state to use their data without active consent for bona fide research, they are not for commercial consumer research purposes. [ref part 1].

Separating consumer and commercial market research from the definition of research purposes for the public good by the state, could be key to rebuilding people’s trust in government data use.

Having separate purposes would permit separate consent and control procedures to govern them.

But what role will profit make in the state’s definition of ‘in the public interest’ – is it in the public interest if the UK plc makes money from its citizens? and how far along any gauge of public feeling will a government be prepared to go to push making money for the UK plc at our own personal cost?

Pay-for-privacy?

In January this year, the Executive Vice President at Dunnhumby, Nishat Mehta, wrote in this article [7], about how he sees the future of data sharing between consumers and commercial traders:

“Imagine a world where data and services that are currently free had a price tag. You could choose to use Google or Facebook freely if you allowed them to monetize your expressed data through third-party advertisers […]. Alternatively, you could choose to pay a fair price for these services, but use of the data would be forbidden or limited to internal purposes.”

He too, talked about health data. Specifically about its value when accurate expressed and consensual:

“As consumers create and own even more data from health and fitness wearables, connected devices and offline social interactions, market dynamics would set the fair price that would compel customers to share that data. The data is more accurate, and therefore valuable, because it is expressed, rather than inferred, unable to be collected any other way and comes with clear permission from the user for its use.”

What his pay-for-privacy model appears to have forgotten, is that this future consensual sharing is based on the understanding that privacy has a monetary value. And that depends on understanding the status quo.

It is based on the individual realising that there is money made from their personal data by third parties today, and that there is a choice.

The extent of this commercial sharing and re-selling will be a surprise to most loyalty card holders.

“For years, market research firms and retailers have used loyalty cards to offer money back schemes or discounts in return for customer data.”

However despite being signed up for years, I believe most in the public are unaware of the implied deal. It may be in the small print. But everyone knows that few read it, in the rush to sign up to save money.

Most shoppers believe the supermarket is buying our loyalty. We return to spend more cash because of the points. Points mean prizes, petrol coupons, or pounds off.

We don’t realise our personal identity and habits are being invisibly analysed to the nth degree and sold by supermarkets as part of those sweet deals.

But is pay-for-privacy discriminatory? By creating the freedom to choose privacy as a pay-for option, it excludes those who cannot afford it.

Privacy should be seen as a human right, not as a pay-only privilege.

Today we use free services online but our data is used behind the scenes to target sales and ads often with no choice and without our awareness.

Today we can choose to opt in to loyalty schemes and trade our personal data for points and with it we accept marketing emails, and flyers through the door, and unwanted calls in our private time.

The free option is to never sign up at all, but by doing so customers pay a premium by not getting the vouchers and discounts.  Or trading convenience of online shopping.

There is a personal cost in all three cases, albeit in a rather opaque trade off.

 

Does the consumer really benefit in any of these scenarios or does the commercial company get a better deal?

In the sustainable future, only a consensual system based on understanding and trust will work well. That’s assuming by well, we mean organisations wish to prevent PR disasters and practical disruption as resulted for example to NHS data in the last year, through care.data.

For some people the personal cost to the infringement of privacy by commercial firms is great. Others care less. But once informed, there is a choice on offer even today to pay for privacy from commercial business, whether one pays the price by paying a premium for goods if not signed up for loyalty schemes or paying with our privacy.

In future we may see a more direct pay-for-privacy offering along  the lines of Nishat Mehta.

And if so, citizens will be asking ever more about how their data is used in all sorts of places beyond the supermarket.

So how can the state profit from the economic value of our data but not exploit citizens?

‘Every little bit of data’ may help consumer marketing companies.  Gaining it or using it in ways which are unethical and knowingly continue bad practices won’t win back consumers and citizens’ trust.

And whether it is a commercial consumer company or the state, people feel exploited when their information is used to make money without their knowledge and for purposes with which they disagree.

Consumer commercial use and use in bona fide research are separate in the average citizen’s mind and understood in theory.

Achieving differentiation in practice in the definition of research purposes could be key to rebuilding consumers’ trust.

And that would be valid for all their data, not only what data protection labels as ‘personal’. For the average citizen, all data about them is personal.

Separating in practice how consumer businesses are using data about customers to the benefit of company profits, how the benefits are shared on an individual basis in terms of a trade in our privacy, and how bona fide public research benefits us all, would be beneficial to win continued access to our data.

Citizens need and want to be offered paths to see how our data are used in ways which are transparent and easy to access.

Cutting away purposes which appear exploitative from purposes in the public interest could benefit commerce, industry and science.

By reducing the private cost to individuals of the loss of control and privacy of our data, citizens will be more willing to share.

That will create more opportunity for data to be used in the public interest, which will increase the public good; both economic and social which the government hopes to see expand.

And that could mean a happy ending for everyone.

The Economic Value of Data vs the Public Good?  They need not be mutually exclusive. But if one exploits the other, it has the potential to continue be corrosive. The UK plc cannot continue to assume its subjects are willing creators and repositories of information to be used for making money. [ref 1] To do so has lost trust in all uses, not only those in which citizens felt exploited.[6]

The economic value of data used in science and health, whether to individual app creators, big business or the commissioning state in planning and purchasing is clear. Perhaps not quantified or often discussed in the public domain perhaps, but it clearly exists.

Those uses can co-exist with good practices to help people understand what they are signed up to.

By defining ‘research purposes’, by making how data are used transparent, and by giving real choice in practice to consent to differentiated data for secondary uses, both commercial and state will secure their long term access to data.

Privacy, consent and separation of purposes will be wise investments for its growth across commercial and state sectors.

Let’s hope they are part of the coming ‘long-term economic plan’.

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Related to this:

Part one: The Economic Value of Data vs the Public Good? [1] Concerns and the cost of Consent

Part two: The Economic Value of Data vs the Public Good? [2] Pay-for-privacy and Defining Purposes.

Part three: The Economic Value of Data vs the Public Good? [3] The value of public voice.

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image via Tesco media

[6] Ipsos MORI research with the Royal Statistical Society into the Trust deficit with lessons for policy makers https://www.ipsos-mori.com/researchpublications/researcharchive/3422/New-research-finds-data-trust-deficit-with-lessons-for-policymakers.aspx

[7] AdExchanger Janaury 2015 http://adexchanger.com/data-driven-thinking/the-newest-asset-class-data/

[8] Tesco clubcard data sale http://jenpersson.com/public_data_in_private_hands/  / Computing 14.01.2015 – article by Sooraj Shah: http://www.computing.co.uk/ctg/feature/2390197/what-does-tescos-sale-of-dunnhumby-mean-for-its-data-strategy

[9] Direct Marketing 2013 http://www.dmnews.com/tesco-every-little-bit-of-customer-data-helps/article/317823/

 

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