Why Disruption is Becoming More Likely in the Data Marketplace

Another weak, another breach. 500 million records were hacked from Marriott, making it the second largest data breach in history, behind Yahoo’s breach of 3 billion user accounts.

For now. There will probably be a bigger breach. There will definitely be a more painful breach. And by painful, I mean painful to you and me.  It’s in that pain – specifically, the degree of the pain – that the future of how we handle our personal data lies.

Markets innovate along paths of least resistance. Market development is a constantly evolving dynamic tension between innovation and resistance. If there is little resistance, markets will innovate in predictable ways from their current state. If this innovation leads to push back from the market, we encounter resistance.  When markets meet significant resistance, disruption occurs, opening the door for innovation in new directions to get around the resistance of the marketplace.  When we talk about data, we are talking about a market where value is still in the process of defining itself. And it’s in the definition of value where we’ll find the potential market resistance for data.

Individual data is a raw resource. It doesn’t have value until it becomes “Big.” Personal data needs to be aggregated and structured to become valuable. This creates a dilemma for us. Unless we provide the raw material, there is no “big” data possible. This makes it valuable to others, but not necessarily to ourselves.

Up to now, the value we have exchanged our privacy for has been convenience. It’s easier for us to store our credit card data with Amazon so we can enable one-click ordering. And we feel this exchange has been a bargain. But it remains an asymmetrical exchange. Our data has no positive value to us, only negative. We can be hurt by our data, but other than the afore-mentioned exchange for convenience, it doesn’t really help us. That is why we’ve been willing to give it away for so little. But once it’s aggregated and becomes “big”, it has tremendous value to the people we give it to. It also has value to those who wish to steal that data from those who we have entrusted it with. The irony here is that whether that data is in the “right” hands or the “wrong” ones, it can still mean pain for us. The differentiator is the degree of that pain.

Let’s examine the potential harm that could come from sharing our data. How painful could this get? Literally every warning we write about here at Mediapost has data at the core. Just yesterday, fellow Insider Steven Rosenbaum wrote about how the definition of warfare has changed. The fight isn’t for land. War is now waged for our minds. And data is used to target those minds.

Essentially, sharing our data makes us vulnerable to being targeted. And the outcome of that targeting can range from simply annoying to life-alteringly dangerous. Even the fact that we refer to it as targeting should raise a red flag. There’s a reason why we use a term typically associated with a negative outcome for those on the receiving end. You’re very seldom targeted for things that are beneficial to you. And that’s true no matter who’s the one doing the targeting. At its most benign, targeting is used to push some type of messaging – typically advertising – to you. But you could also be targeted by Russian hackers in an attempt to subvert democracy. Most acutely, you could be targeted for financial fraud. Or blackmail. Targeting is almost never a good thing. The degree of harm can vary, but the cause doesn’t. Our data – the data we share willingly – makes targeting possible.

We are in an interesting time for data. We have largely shrugged off the pain of the various breaches that have made it to the news. We still hand over our personal data with little to no thought of the consequences. And because we still participate by providing the raw material, we have enabled the development of an entire data marketplace. We do so because there is no alternative without making sacrifices we are not willing to make. But as the degree of personal pain continues to get dialed up, all the prerequisites of market disruption are being put in place. Breaches will continue. The odds of us being personally affected will continue to climb. And innovators will find solutions to this problem that will be increasingly easy to adopt.

For many, many reasons, I don’t think the current trajectory of the data marketplace is sustainable. I’m betting on disruption.

 

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.