Friday, July 8, 2011

Selling your data makes more money than it costs to provide free services

your data: gain control
It's obvious really, but Google couldn't be so profitable and Facebook couldn't have such an astonishing valuation unless they had the actual or potential to make more money than it costs to provide their services for 'free.' They each, like most Internet companies, make money out of selling your data to companies that want to sell you stuff and they continue to innovate and change the world of advertising, destabilising many traditional advertising channels as a result.

Google and Facebook are each in a little trouble, but they're so big and successful it's hard to see right now.

On 24 June Google announced the phased withdrawal of Google Health, a way of storing patient health data in the cloud; and Google PowerMeter which aimed to give more accurate energy consumption information to users.

Google, of course, has the slogan "Don't be evil" but people trust it less after several well-publicised controversies, including the capture of some information broadcast by un-encrypted wireless routers encountered by Google Street View mapping vehicles.

Would you really want your health information stored in Google's cloud? What would it be worth to insurance providers?! And energy consumption can reveal marketing demographic information, as well as let thieves know when a property is occupied if it's not protected sufficiently...

Yesterday ad agency JWT reported a survey showing that 75-80% of US consumers don't trust the security and privacy of Facebook enough to use it for eCommerce shopping.

The tech world is changing rapidly: 'cloud' has been the industry's mantra for the last year or more, but consumers are shocked and worried by massive breaches of password and credit card details, and reluctant to share private information that is used for marketing. Increasingly, consumers realise that if they're not paying for the services they use then the companies must be making money some other way, normally off the back of their data.

Expect an increasing demand for products like Starfish that return power to the consumer, recognising it's "your data: gain control."

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