Data monetization

WHOSE DATA REALLY ARE? (2 / 2)

The question addressed in the second part of this column is what's next in the realm of data ownership as Open Banking and Open Finance become more mainstream and massively adopted.

It is already clear that “openness” is a trend that will continue. However, the disruption, the paradigm shift on value, and wealth will come as a result of the mass and individualized monetization of data. This is the consequence of reaching technological maturity: recognizing the value of data and assigning its ownership. In that sense, it becomes inevitable and evident that people will begin to reap the benefits of the new “oil”, to paraphrase the British mathematician Clive Humby, who in 2006 coined the phrase “Data is the new oil”.

The president of the Central Bank of Brazil, Roberto Campos Neto, recently cited data monetization as "a more relevant issue than the metaverse itself." "Just as we're doing open banking, open finance, open insurance, open health, we need to have something so that people can monetize their data more efficiently," he said. For him, just as the large social networks created a disruptive environment in relation to traditional media, "parallel data monetization networks will create a disruptive environment for social networks."

When I think of data monetization, DrumWave comes to mind. This company, founded in Palto Alto in 2015 by a Colombian and two Brazilians (Santiago Ortiz, André Vellozo and Alberto Blumenschein), revolutionizes the massive monetization of data. Its success is due to the creation of the first scalable solution on the market: the development of a digital data wallet (the dWallet) in which personal information can be traded with companies. The thesis is that this would give the individual the power to obtain information collected by Facebook, or any other digital service, and sell it to third parties.

These are three obstacles that data monetization faces and that DrumWave has dared to tackle, based on the vision that monetization is the last mile of the information economy, and that it is a great opportunity for companies and individuals.?

First of all, there are no standards that certify and determine the value of the data. DrumWave has created an entire ecosystem (The Data Value Ecosystem) that allows you to connect, qualify, value and share data for free or for a previously established price. Just as Google generates a "score" for each web page, DrumWave's DIM (Data Information Meaning) calculates the value of the data.

Second, there is no plan on how to encourage companies that process and store consumer data to give up an asset that generates revenue for them. One option is for governments to recognize that the data is owned by the individual, that we already pay for its processing, and therefore have an unquestionable right to it. Cellular data processing is already included in the bill that a consumer pays each month.

California's legislation is state of the art in terms of property and data protection and, because it has a "pollution" impact, its effects are seen in every state in the US and around the world. The CCPA (California Consumer Privacy Act) went into effect in 2020 and provides that, for the first time, California residents have the legal right to (1) demand that their personal information not be sold; (2) obtain a copy of the information certain companies have about them; and (3) request that companies delete your personal information.?

An innovative aspect of the CCPA is that it recognizes how difficult it can be for consumers to exercise their rights. For that reason, it sets up an authorized agent who can make certain requests on your behalf:

• Help people opt out of companies selling their information.
• Issue legally enforceable requests to delete an individual's data.
• Request a copy of an individual's data from certain companies.

With an authorized agent, consumers do not have to do anything. By giving your permission, the agent can handle your data-related requests. Consumers will also need to validate their identity for access and deletion requests, but that's about it.

Essentially, DrumWave is a licensed agent that does much more. Once it obtains the copy of the data on behalf of the consumer, DrumWave structures and standardizes it. In addition, it verifies the authenticity and assigns a value to them. The circle of empowerment closes perfectly when the consumer can enter dWallet and say what to do with that data: sell it, give it away or donate it.

Once data is transformed into quantifiable assets, its similarities to the financial sector cannot be ignored. Many digital banks will also become data brokers and manage these assets as they do now with FIATS, tokens and cryptocurrencies. In short, with the massification of Web3, the fluidity between the different types of assets will be accentuated, giving way to data brokers becoming digital banks. In either case, there is a clear opportunity for disruption.

I imagine the reader is interested in knowing how much value the data can generate. DrumWave accounts provide an average remuneration of US$50 per month for each user of the service. Not bad if we consider that in Peru the minimum wage is US $260 per month.

But not only the individual can generate value. “Today, the data is mainly used for advertising and to improve credit analysis. But they can go much further. A delivery company generates thousands of information about routes, fuel consumption, tire wear, vehicle maintenance. All of this has value, as long as the data is organized,” says Fernando Teles, president of DrumWave and former CEO of Visa in Brazil.

Obtaining the same rights as California residents over their data will not be easy for citizens of Latin America. Data protection and ownership legislation will be hampered by the forces of crony capitalism that perpetuate oligopolies and prevent free enterprise from dictating the rules of the market. In any case, the change is inevitable, and it will be driven by international organizations that seek to standardize trade rules.

A third obstacle to data monetization is the right to privacy. The "monetizers" argue that privacy has already been significantly compromised. They also argue that some services being offered for free in exchange for a lot of data is not fair, and their equation favors big data companies. I agree 100% with this argument. Laws such as those in the state of California, or those being considered in Brazil, empower the individual and leave the decision of what to do with their data in their hands, including the alternative of obtaining financial benefits.

#datamonetization #drumwave #d-wallet

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