The Personal Data Eco-system

Post from 2009 reposted here to facilitate further discussion.

At the VRM workshop, we discussed the need for the concept of the Personal Data Store, what it would do in practice, and what that will ultimately enable.

Why we need such things – because individuals have a complex need to manage personal information over a lifetime, and the tools they have at their disposal today to do so are inadequate. Existing tools include the brain (which is good but does not have enough RAM, onboard storage, or an ethernet socket……thankfully), stand alone data stores (paper, spreadsheets, phones, which are good but not connected in secure ways that enable user-driven data aggregation and sharing), and supplier based data stores (which can be tactically good but are run under the supplier provided terms and conditions). NB Our current perception of ‘personal data stores’ is shaped by the good ones that are out their (e.g. my online bank, my online health vault); what we need is all of that functionality, and more – but working FOR ME.

What they will do/ enable – the term Personal Data Store is not an ideal term to describe a complex set of functions, but it is what it is until we get a better one (the analogy I’d use in more ways than one is the term ‘data warehouse’ – again a simplistic term that masks a lot of complex activity). A Personal Data Store can take two basic forms:

Operational Data Stores – that get things done, and only need store sufficient breadth and depth of data to fulfill the operation they are built for (e.g. pay a credit card bill, book a doctor’s appointment, order my groceries).

Analytical Data Stores – that underpin and enable decision making, and which typically need a more tightly defined, but much deeper data-set that includes data from a range of aspects of life rather than just that from one specific operation (e.g. plan a home move, buy a car, organise an overseas trip).

A sub-set of the individual’s overall data requirement will lie in both of the above, this being the data that then integrates decision-making and doing.

In both cases, the functionality required is to source, gather, manage, enhance and selectively disclose data (to presentation layers, interfaces or applications).

We also discussed ‘who has what data on you’ and introduced the following diagrams to explain current state and target state (post deployment of Volunteered Personal Information (VPI) tech and standards).

The key terms that require explanation are:

My Data – is the data that is undeniably within, and only within, the  domain of an individual. It’s defining characteristic is that it has demonstrably not been made available to any other party under a signed, binding agreement. This space has been increasingly encroached upon by technology and organisations in recent history (e.g. behavioural tracking tools like Phorm) and this encroachment will continue. Indeed a general comment can be made that ‘my data’ equates to privacy in the context of personal data; so the rise of the surveillance society and state is a direct assault on ‘My Data’. Management of ‘My Data’ can be run by the individual themselves, or outsourced to a ‘fourth party service’.

Your Data – is the data that is undeniably within the domain of an organisation; either private, public or third sector. Proxy views of this data may exist elsewhere but are only that. This data would include, for example, the organisations own master records of their product/ service range, their pricing, their costs, their sales outlets and channels. Customer-facing views of much of Your Data is made available for reproduction in the ‘Our Data’ intersect.

Our Data – is the data that is jointly accessible to both buyer and seller/ service provider, and also potentially to any other parties to an interaction, transaction or relationship. It is the data that is generated through engaging in interactions and transactions in and around a customer/ supplier relationship. Despite being ‘our’ data, it is probably technically owned, or at least provided under terms of service designed by the seller/ service provider; in practical terms this also means that the seller/ service provider dictates the formats in which this data exists/ is made available.

Their Data – is the data built/ owned/ sold by third party data aggregators, e.g. credit bureaux, marketing data providers in all their forms. It’s defining characteristic is that it is only available/ accessible by buying/ licensing it from the owner.

Everybody’s Data – is the public domain data, typically developed/ run by large, public sector(ish) entities including local government (electoral roll), Post Offices (postal address files), mapping bureau (GIS). Typically this data is accessible under contract, but the barriers to accessing these contracts are set low – although often not low enough that an individual can engage with them easily.

The Basic Identifier Set/ Bit in the Middle – this is the core personal identity data which, like it or not, exists largely in the public domain – most typically (but not exclusively) as a result of electoral rolls being made available publicly, and specifically to service providers who wish to build things from them. This characteristic is that which enables the whole personal eco-system and its impact on data privacy to exist, with the individual as the un-knowing ‘point of integration’ for data about them.

Propeller Current State

The ovals in the venn diagram represent the static state, i.e. where does data live at a point in time. The flow arrows show where data flows to and from in this eco-system; I use red to signify data flowing under terms and conditions NOT controlled by the individual data subject.

Flow 1 (My Data to Your Data, and My Data to Our Data) – Individuals provide data to organisations under terms and conditions set by the organisation, the individual being offered a ‘take it or leave it’ set of options. Some granularity is often offered around choices for onward data sharing and use, i.e. the ‘tick boxes’ we all know and which are one of the main bitsof legacy CRM that VRM will fix.

Flow 2 (Your Data to Your Data, including Our Data) – Organisations share data with other organisations, usually through a back-channel, i.e. the details of the sharing relationship are typically not known to the data subject.

Flow 3 (Your Data, including Our Data to Their Data) – Organisations share data with a specific type of other organisation, data aggregators, under terms and conditions that enable onward sale. Typically the sharer is paid for this data/ has a stake in the re-sale value.

Flow 4 (Everybody’s Data to Their Data) – Data Aggregators use public domain data sources to initiate and extend their commercial data assets.

The target state is shown below, a different scenario altogether – and one which I believe will unfold incrementally over the next ten years or so…..data attribute by data attribute, customer/ supplier management process by customer/ supplier management process, industry sector by industry sector. In this scenario, the individual and ‘My Data’ becomes the dominant source of many valuable data types (e.g. buying intentions, verified changes of circumstance), and in doing so eliminates vast amounts of guesswork and waste from existing customer/ citizen managment processes.

The key new capabilities required to enable this to happen are those being worked on in the User Driven and Volunteered Personal Information work groups at Kantara (one tech group, one policy/ commerce one), and elsewhere within and around Project VRM. The new capabilities will consist of:

– personal data store(s), both operational and analytical

– data and technical standards around the sharing of volunteered personal information

– volunteered personal information sharing agreements (i.e. contracts driven by the individual perspective, creative commons-like icons for VPI sharing scenarios)

– audit and compliance mechanics

Around those capabilities, we will need to build a compelling story that clearly articulates, in a shared lexicon (thanks to Craig Burton for reminding us of the importance of this – watch this space), the benefits of the approach – for both individuals and organisations.

The target state that will emerge once these capabilities begin to impact will include the 4 additional individual-driven information flowsover and above the current ones. The defining characteristic of these new flows is that the can only be initiated by the data subject themselves, and most will only occur when the receiving entity has ’signed’ the terms and conditions asserted by the individual/ data subject. The new flows are:

Flow 5 (My Data to Your Data (inc Our Data) – Individuals will share more high value, volunteered information with their existing and potential suppliers, eliminating guesswork and waste from many customer management processes. In turn, organisations will share their own expertise/ data with individuals, adding value to the relationship.

Flow 6 (Everybody’s Data to My Data) – With their new, more sophisticated personal information management tools, individuals will be able to take direct feeds from public domain sources for use on their own mashups and applications (e.g. crime maps covering where I live/ travel)

Flow 7 (My Data to (someone else’s) My Data) – An enhanced version of ‘peer to peer’ information sharing.

Flow 8 (My Data to Their Data) – The (currently) unlikely concept of the individual making their volunteered information available to/ through the data aggregators. Indeed we are already starting to see the plumbing for this new flow being put in place with the launch of the Acxiom Identity Card.

Propeller Target State

The implications of the above are enormous, my projection being that over time some 80% of customer management processes will be driven from ‘My Data’. I’m pretty confident about that, a) because we are already see-ing the beginning of the change in the current rush for ‘user generated content’ (VPI without the contract), and b) because the economics will stack up. Organisation need data to run their operations – they don’t really mind where it comes from. So, if a new source emerges that is richer, deeper, more accurate, less toxic – and all at lower cost than existing sources; then organisations will use this source.

It won’t happen overnight obviously; as mentioned above specific tools, processes and commercial approaches need to emerge before this information begins to flow – and even then the shift will be slow but steady, probably beginning with Buying Intention data as it is the most obvious entry point with enough impact to trigger the change. That said, the Mydex social enterprise already has a working proof of concept up and running showing much of the above working. A technical write up of the proof of concept build can be found here. And the market implications of this are explored in more detail in new research on the market value of VPI shortly to be published by Alan Mitchell at Ctrl-Shift.

The two hour session at the VRM workshop was barely enough to scratch the surface of the above issues, so the plan is to continue the dialogue and begin specifying the capabilities required in detail in the User Driven and Volunteered Personal Information (technology) workgroup at The Kantara Initiative. The workgroup charter can be found here. A parallel workgroup focused on business and policy aspects will also be launched in the next few weeks. Anyone wishing to get involved in the workgroup can sign up to the mailing list hereand we’ll get started with the work in the next couple of weeks.

We are not fish and advertising is not food

This is how the Internet looks to the online advertising business today:

2manyfish

This is how they approach it:

fishfeeding

And this is the result:

fishfeeding_mess

Advertising is a huge source of the “data pollution” Fred Wilson talked about at LeWeb a few weeks ago. (See here, starting at about 23 minutes in.)

What’s wrong with this view, and this approach, is the architectural assumption that:

  1. We are consumers and nothing more. Fish in a bowl.
  2. The Net — and the Web especially — is a container.
  3. Advertisers have a right to target us in that container. And to track us so we can be targeted.
  4. Negative externalities, such as data pollution, don’t matter.
  5. This can all be rationalized as an economic necessity.

Yet here is what remains true, regardless of the prevailing assumptions of the marketing world:

  1. We are not fish. Rather, as Cluetrain put it (in 1999!), we are not seats or eyeballs or end users or consumers. we are human beings and our reach exceeds your grasp. deal with it.
  2. The Net was designed as a wide open space where all the intelligence that matters is at its ends, and each of us sits (stands, walks, drives) at one.
  3. Even if advertisers have a legal right to target us, their manners are terrible and doomed for correction.
  4. Negative externalities matter. A lot. As Fred said in his talk, we eventually dealt with the pollution caused by industry, and we’ll deal with it in the virutal world as well.
  5. The larger economic necessity is for a well-functioning marketplace. We’ll get that online once free customers prove more valuable than captive ones.

The key is to replicate online the experience of operating as a free and independent customer in the physical world.

For example, when you go into a store, your default state is anonymity. Unless you are already known by name to the people at the store,  you are nameless by default. This is a civic grace. There is no need to know everybody by name, and to do so might actually slow things down and make the world strange and creepy. (Ask anybody who has lived in a surveillance state, such as East Germany before it fell, what it is like to be followed, or to know you might be followed, all the time.) We haven’t yet invented ways to be anonymous online, or to control one’s anonymity. But that’s a challenge, isn’t it? Meaning it is also a market opportunity.

We’ve lived in a fishbowl long enough. Time to get human. I guarantee there’s a lot more money coming from human beings than from fish whose only utterances are clicks.

Data Privacy Legal Hack-A-thon

Customer Commons is supporting, and board member, Mary Hodder, is hosting the Bay Area event. Additionally, there are NYC and London locations. Please join us if you are interested:

Data Privacy Legal Hackathon 2014
Data Privacy Legal Hackathon 2014

This is an unprecedented year documenting our loss of Privacy. Never before have we needed to stand up and team up to do something about it. In honour of Privacy Day, the Legal Hackers are leading the charge to do something about it, inspiring a two-day international Data Privacy Legal Hackathon. This is no ordinary event. Instead of talking about creating privacy tools in theory, the Data Privacy Legal Hackathon is about action! A call to action for tech & legal innovators who want to make a difference!

We are happy to announce a Data Privacy Legal Hackathon and invite the Kantara Community to get involved and participate. We are involved in not only hosting a Pre-Hackathon Project to create a Legal Map for consent laws across jurisdictions, but the CISWG will also be posting a project for the Consent Receipt Scenario that is posted in on the ISWG wiki.

The intention is to hack Open Notice with a Common Legal Map to create consent receipts that enable ‘customisers’ to control personal information If you would like to get involved in the hackathon, show your support, or help build the consent receipt infrastructure please get involved right away — you can get intouch with Mark (dot) Lizar (at)gmail (dot) com, Hodder (at) gmail (dot) com, or join the group pages that are in links below.

Across three locations on February 8th & 9th, 2014, get your Eventbrite Tickets Here:

* New York City * London, UK * San Francisco *

http://legalhackers.org/privacyhack2014/

This two-day event aims to mix the tech and legal scenes with people and companies that want to champion personal data privacy. Connecting entrepreneurs, developers, product makers, legal scholars, lawyers, and investors.

Each location will host a two-day “judged” hacking competition with a prize awarding finale, followed by an after-party to celebrate the event.

The Main Themes to The Hackathon Are:

  • Crossing the Pond Hack
  • Do Not Track Hack
  • Surveillance & Anti-Surveillance
  • Transparency Hacks
  • Privacy Policy Hack
  • Revenge Porn Hack

Prizes will be awarded:

  • 1st Prize:  $1,000
  • 2nd Prize:  $500
  • 3rd Prize: $250

There are pre-hackathon projects and activities. Join the Hackerleague to participate in these efforts and list your hack:

Sponsorship Is Available & Needed

Any organization or company seeking to show active support for data privacy and privacy technologies is invited to get involved.

  • Sponsor: prizes, food and event costs by becoming a Platinum, Gold or Silver Sponsor
  • Participate: at the event by leading or joining a hack project
  • Mentor: projects or topics that arise for teams, and share your expertise.

 

Contact NYC sponsorship: Phil Weiss email or @philwdjjd

Contact Bay Area sponsorship: Mary Hodder – Hodder (at) gmail (dot) com – Phone: 510 701 1975

Contact London sponsorship: Mark Lizar – Mark (dot) Lizar (at)gmail (dot) com – Phone: +44 02081237426 – @smarthart

Omie Update (version 0.2)

We’re overdue an update on the Omie Project…., so here goes.

To re-cap:

We at Customer Commons believe there is room/ need for a device that sits firmly on the side of the individual when it comes to their role as a customer or potential customer.
That can and will mean many things and iterations over time, but for now we’re focusing on getting a simple prototype up and running using existing freely available components that don’t lock us in to any specific avenues downstream.
Our role is demonstrate the art of the possible, catalyse the development project, and act to define what it means to ‘sit firmly on the side of the customer’.
For now, we’ve been working away behind the scenes, and now have a working prototype (Omie 0.2). But before getting into that, we should cover off the main questions that have come up around Omie since we first kicked off the project.

What defines an Omie?

At this stage we don’t propose to have a tight definition as the project could evolve in many directions; so our high level definition is that an Omie is ‘any physical device that Customer Commons licenses to use the name, and which therefore conforms to the ‘customer side’ requirements of Customer Commons.

Version 1.0 will be a ‘Customer Commons Omie’ branded white label Android tablet with specific modifications to the OS, an onboard Personal Cloud with related sync options, and a series of VRM/ Customer-related apps that leverage that Personal Cloud.

All components, wherever possible, will be open source and either built on open specs/ standards, or have created new ones. Our intention is not that Customer Commons becomes a hardware manufacturer and retailer; we see our role as being to catalyse a market in devices that enable people in their role of ‘customer’, and generate the win-wins that we believe this will produce. Anyone can then build an Omie, to the open specs and trust mechanisms.

What kind of apps can this first version run?

We see version 1 having 8 to 10 in-built apps that tackle different aspects of being a customer. The defining feature of all of these apps is that they all use the same Personal Cloud to underpin their data requirements rather than create their own internal database.

Beyond those initial apps, we have a long list of apps whose primary characteristic is that they could only run on a device over which the owner had full and transparent control.

We also envisage an Omie owner being able to load up any other technically compatible app to the device, subject to health warnings being presented around any areas that could breach the customer-side nature of the device.

How will this interact with my personal cloud?

As noted above, we will have one non-branded Personal Cloud in place to enable the prototyping work (on device and ‘in the cloud’), but we wish to work with existing or new Personal Cloud providers wishing to engage with the project to enable an Omie owner to sync their data to their branded Personal Clouds.

Where are we now with development?

We now have a version 0.2 prototype, some pics and details are below. We intend, at some point to run a Kickstarter or similar campaign to raise the funds required to bring a version 1.0 to market. As the project largely uses off the shelf components we see the amount required being around $300k. Meantime, the core team will keep nudging things forward.

How can I get involved?

We are aiming for a more public development path from version 0.3. We’re hoping to get the Omie web site up and running in the next few weeks, and will post details there.

Alternatively, if you want to speed things along, please donate to Customer Commons.

VERSION 0.2

Below are a few pics from our 0.2 prototype.

Home Screen – Showing a secure OS, a working, local Personal Cloud syncing to ‘the cloud’ for many and varied wider uses. This one shows the VRM related apps, there is another set of apps underway around Quantified Self.

Omie 0.2 Home Screen

My Suppliers – Just as a CRM system begins with a list of customers, a VRM device will encompass a list of ‘my suppliers’ (and ‘my stuff’).

Omie 0.2 My Suppliers

My Transactions – Another critical component, building my transaction history on my side.

Omie 0.2 Transactions

Intent Casting/ Stroller for Twins – Building out Doc’s classic use case, real time, locally expressed intention to buy made available as a standard stream of permissioned data. Right now there are about 50 online sellers ‘listening’ for these intent casts, able to respond, and doing business; and 3 CRM systems.

Omie 0.2 Intent Casting

So what have we learned in the build of version 0.2?

Firstly, that it feels really good to have a highly functional, local place for storing and using rich, deep personal information that is not dependent on anyone else or any service provider, and has no parts of it that are not substitutable.

Secondly, that without minimising the technical steps to take, the project is more about data management than anything else, and that we need to encourage a ‘race to the top’ in which organisations they deal with can make it easy for customers to move data backwards and forwards between the parties. Right now many organisations are stuck in a negative and defensive mind-set around receiving volunteered information from individuals, and very few are returning data to customers in modern, re-usable formats through automated means.

Lastly that the types of apps that emerge in this very different personal data eco-system are genuinely new functions not enabled by the current eco-system, and not just substitutes for those there already. For example, the ‘smart shopping cart’ in which a customer takes their requirements and preferences with them around the web is perfectly feasible when the device genuinely lives on the side of the customer.

Beyond the Advertising Bubble

Let’s start with some required reading, from @TimHwang and @AdiKamdar:

peakadvertising

About the peak:

Worryingly, advertising is not well. Though companies supported by advertising still dominate the landscape and capture the popular imagination, cracks are beginning to appear in the very financial foundations of the web. Despite the best efforts of an industry, advertising is becoming less and less effective online. The once reliable fuel that powered a generation of innovations on the web is slowly, but perceptibly beginning to falter.

And the theory:

The theory of Peak Advertising relies on a simple proposition: online advertising will continuously decline in effectiveness going into the future, to the extent that it makes existing models unsustainable.This will, in turn, eventually force a broad transition in the financial models supporting the web. There are a few reasons to believe that this will be the case.

First, the changing demographics of web users do not favor advertising…

Second, ad blocking is increasingly ubiquitous…

Third, click fraud remains a severe and growing problem…

Finally, ever escalating advertising density may itself erode effectiveness.

The Theory of Peak Advertising is a working paper, so I’ll volunteer some additional sources.

First is Don Marti‘s corpus of writing about business, and advertising in particular. (For the latest, watch Part I and Part II of Don’s interview with Slashdot on “Why Targeted Ads Don’t Work.” There’s a transcript in Part II.)

Second is The Intention Economy: When Customers Take Charge (Harvard Business Review Press, 2012), which contains a chapter titled “The Advertising Bubble,” to which Don contributed some valuable research, digging deep into Harvard’s world-record-size collection of scholarly works. Here’s an excerpt:

Advertimania
The etymologist Douglas Harper calls mania “mental derangement characterized by excitement and delusion,” adding that it has been used in the “sense of ‘fad, craze’” since the 1680s and since the 1500s “as the second element in compounds expressing particular types of madness (cf. nymphomania, 1775; kleptomania, 1830; megalomania, 1890).”

We have that in advertising, so in a blog post I volunteered advertimania to Harper’s lexicon. Let’s unpack it here:

  • An overly generous infusion of liquidity, in the form of venture capital. This capital is invested both in companies that expect to make money through advertising, and in advertising for those companies and others. This was rampant in the dot-com boom, and is again today.
  • Faith in endless growth for advertising, and in its boundless capacity to fund free services to users.
  • Herd mentality—around advertising itself, and in faith that “social” media, supported by advertising as a business model, will persist and grow indefinitely. (And the herd is large too.)
  • Huge increase in trading. This is happening with user data bought and sold in back-end markets, employing the same kind of “quants” who worked on Wall Street during the housing bubble.
  • Low quality of personal information, despite the claims of companies specializing in personalization.

And that’s just on advertising’s side of the Chinese wall. Over here on our side, we can add to that list (especially the last item) six delusions, inclusive of the ones listed above by Professor Clemmons:

  1. We are always ready to buy something. We’re not. In fact, most of the time we’re not about to buy anything. Even if we don’t mind being exposed to advertising when we’re not buying, nearly all of us do mind being watched constantly—especially by parties whose only interest is in selling us stuff.
  2. People will welcome totally personalized advertising. Even if people allowed themselves to be tracked constantly through the world, and to be understood in great detail (a privilege that advertisers have done nothing to earn) the result would still be guesswork, which is the very nature of advertising.  For customers, rough impersonal guesswork is tolerable, because they’re used to it. Totally personalized guesswork is not. At least not by advertising. To become totally personal, advertising needs to cross an existential bridge, to become a different corporate function. It must become sales, without the human sound or the human touch.
  3. The market for tracking-based advertising is large enough to justify the huge investments being made in it. Christopher Meyer, founder of MonitorTalent and author of many books on market optimism (including Blur: The Speed of Change in the Connected Economy and Future Wealth, co-authored with Stanley M. Davis) says, “It’s a classic bubble. Investments in tracking-based advertising far exceed even the most optimistic projected returns. The whole business just won’t be that big. In fact the whole advertising category is starting to plateau.”
  4. Advertising is something people actually like, or can be made to like. It’s not. With a few all-too-rare exceptions (such as Superbowl ads, which are typical mostly of themselves), advertising is something people tolerate at best and loathe at worst. Improving a pain in the ass does not make it a kiss. Nor does putting a thumbs-up “like” button next to an ad that gets ignored 99.9 percent of the time—as happens with display ads on Facebook, for example. (It’s also worth noting that Facebook originally put thumbs-down symbols next to ads, but quickly got rid of them. It’s easy to guess why.)
  5. The client-server structure of e-commerce will persist unchanged. It won’t. We’ll explain why in the next chapter, meanwhile, here’s Phil Windley: “There are a billion commercial sites on the Web, each with its own selling systems, its own cookies, its own way of dealing with customers, and its own pile of data about each customer. This whole architecture will collapse as soon as customers have their own systems for dealing with sellers, their own piles of data, and their own contexts for interaction.”
  6. Companies have to advertise. In fact advertising is not an essential function of any company. The difference between an advertiser and an ordinary company is zero. Even if we call advertising an investment, it’s on the expense side of the balance sheet, and an easy item to cut.

Each of those delusions is a brick in the Chinese wall between the industry’s mentality and the larger marketplace outside of it. You could call that wall a blind side, but it’s more than that. It’s a screen on which an industry that smokes its own exhaust has long been projecting its fantasies. It sees those projections rather than the real human beings on the other side. It also fails to see what those human beings might bring to the market’s table, beyond cash, credit cards and coerced “loyalty.”

Tim and Adi are concerned about The Future of the Web (the second half of their title) because so much of what we frequent there is funded by advertising, which is getting to be post-peak:

The central importance of advertising to business online means that Peak Advertising will impact more than just media buyers and vendors. As the value of advertising inventory collapses, it will fundamentally change our experience of the web: everything from the diversity of services that we might choose from to our notions of privacy online will be affected.

They conclude,

One can imagine some breakthrough innovation that eliminates this problem wholesale and maintains the status quo. Someone might develop a behavioral targeting system that perfectly delivers compelling ads to the right customer flawlessly. The current failure to do so even with massive data about user behavior seems to discount this scenario.

In the alternative, someone might innovate an entirely different business that provides margins and revenue flow comparable or better than advertising. It is likely that such a transition would require significant changes in how we experience the web. Go with the models that we know: an Internet where the most massive companies ran on subscriptions, for example, would grow significantly slower, be more subject to user demands, and would likely feature smaller user bases than the ones that we see today. This avoids the obvious issue, too, that not all existing businesses would be able to transition successfully in time, particularly those that have built the most successful businesses on advertising.

We may very well reach and pass the point of Peak Advertising without any significant innovation emerging to maintain and grow the flow of revenue supporting the Internet. What will be left with is a stagnant and ever eroding flow of revenue from the primary sources of advertising, and the inadequate substitution of new forms of advertising in its place. Of the few players that remain, they will produce a web experience that engineers the erosion of user privacy and the blurring of the line between real content and advertising.

The future we end up with is partially a matter of technological innovation, but also a matter of human choice. To those designing platforms and using those platforms, the issue is: what kind of Internet do we want to have?

Ultimately, what Peak Advertising suggests is that the fundamental economics of the web increasingly force this consequential decision on all participants, user and platform alike.

The Intention Economy sees a consequential future in which we still have advertising, but in which more Net-aligned market interactions prevail — and out-perform what we have today with Web services and sites primarily funded by advertising:

The fix
Advertising may fund lots of stuff that we take for granted (such as Google’s search), but it flourishes in the absence of more efficient and direct demand-supply interactions. The Internet was built to facilitate exactly those kinds of interactions. This it has done since the mid-‘90s—but only within a billion different silos, each with its own system for interacting with users, and each with its own asymmetrical power relationship between seller and buyer. This system is old, broken and long overdue for a fix.

The Internet, meanwhile, has always been a symmetrical system. Its architecture, defined by its founding protocols (which we’ll visit in the Net Pains chapter) embodies “end-to-end” principles. Every end on the Net has equal status, whether that end is Amazon.com, the White House, your laptop or your phone. This architectural fact is a background against which advertising’s asymmetries, and its delusional assumptions, have always stood in sharp relief.
So, then
When the backlash is over, and the advertising bubble deflates, advertising will remain an enormous and useful business. We will still need advertising to do what only it can do. What will emerge, however, is a market for what advertising can’t do. This new market will be defined by what customers actually want, rather than guesses about it.

The Intention Economy also reports on work toward that future, fostered by ProjectVRM and allied work toward liberating customers and increasing their ability to engage, resulting in far more widespread and effective direct market interactions than advertising’s highly indirect Attention Economy can produce.

Since the book came out, the number and variety of VRM development projects, companies and infrastructural code bases has multiplied. It’s still early in their evolution, but their direction gets clearer every day.

Remember: the commercial Web is only eighteen years old. It is easy to assume, in these early years, that the first widespread business model is the only one. It’s not. Ecommerce itself is doing fine. Subscriptions are messy and silo’d, but showing signs of widespread normalization. And we’re starting to see signs that companies value service as much as sales, which opens a vast greenfield of new economic opportunities.

Most importantly, we — the customers — are just starting to liberate ourselves. When we finally do throw off the shackles, an abundance of new solutions will also show up: ones that will do far more than just patch cracks in the walls of online advertising’s castle.

Healthy markets depend on powerful customers, not just powerful companies. Both help each other. That didn’t happen much in the Attention Economy, which valued captive customers more than free ones. It will in the Intention Economy, which values free customers more than captive ones.

AT&T’s paint job on confusing pricing

attstoreIn AT&T Ridding Some Retail Stores of Cash Register, Counters and Other Clutter, John McDermott of AdAge explains how the company is making its stores “warmer” to improve the “shopping experience” there. Which is all fine, as far as it goes.

Where it doesn’t go is toward fixing AT&T’s pricing. I explain that in a comment under the piece, which I’ll format in a “warmer” way here:

Nice as these showrooms may be, they are still just a paint job on the complicated shell game called “plans.” Right now AT&T is pushing “mobile share” plans, which are confusing in the extreme, and pointless if you’re single. Then you’re here with individual plans, or here if you’re new and solo.

Look closely at the small print. You can pay $30/mo for 3Gb of data or $50 for 5Gb. The overage charge for both is $10 per Gb. So you’re a sucker if you go with the 5Gb plan, and you use only 3 or 4 Gb. I mean, buy the 3Gb and you’ll also pay 50 if you use 5Gb. Confused? Sure. That’s the idea. AT&T, like Verizon and most other mobile carriers, is a confusopolist. See Dilbert for the definition.

AT&T runs these shell games to confuse the customer. Here’s how your mileage may vary::: If you have an iPhone, go to Settings/General/Usage/Cellular usage. See how much Cellular Network Data you’ve used since the Last Reset. Even if you’re a heavy data user, I’m betting it’s way less than 3Gb/mo, which would mean you’re overpaying. But if you want to save by paying for a lower level, there’s only one: $14.99 for 250Mb, or 1/4 of a Gb. The overage charge at that level is $14.99 per 250 MB. That means you pay 4¢ less than $60 per Gb.

Now, how many of us actually look at what we use? And what is the first cost of a bit in any case? (Operations have costs; bits cost ~$0.)

Back when I consulted BT in the UK, an executive there told me the core competence of phone companies was not telephony or communications, but billing. Or, you might say, bilking. Fortunately for the marketplace, Sprint has ceased being a confusopolist and offers unlimited data. If AT&T is truly serious about being good to customers, it should do the same.

Reasonable customers don’t just want a “better shopping experience.” They want a best possible service experience, especially from companies that bill them every month. They also don’t begrudge any business from making money. In fact there are plenty of studies — as well as ample experience in the world — suggesting that people will gladly pay more for better service and human-to-human engagement. For example: Apple stores.

Here’s hoping that AT&T’s new changes are deeper than the paint job they appear to be so far.

Bonus linkage from The Wall Street Journal.

For personal data, use value beats sale value

There’s an argument that goes like this:

  1. Companies are making money with personal data, and
  2. They are getting this data for free. Therefore,
  3. People should be able to make money with that data too.

This is not helpful framing, if we want to get full value out of our personal data. Or even to understand what the hell personal data is.

Stop and think about this for a second:

That data has far more use value than sale value. This use value is almost entirely untapped. Thinking about its sale value requires that you think the same way big companies do. This is as big a mistake in 2013 as it was —

  • in 1980 to think about personal computing in terms of what big enterprises did with mainframes; and
  • in 1993 to think about personal networking in terms of services provided by phone and cable companies.

In 1982 the IBM PC came along, and MS-DOS. And then the Macintosh in 1984. By 1985  there were tens of thousands of personal apps running on personal computers, doing far more than any company could do with its own computers, no matter how big those computers were. This turned out to be good for everybody, including the big companies with the big computers.

Likewise, in 1995 the Internet came along in a big way (ISPs, email, browsing, dial-up, e-commerce), and within months it was clear than anybody could network together with anybody else in the world at a cost that rounded to zero, and with a degree of freedom that was unimaginable within the systems controlled by phone and cable companies.  (Eighteen years later, the phone and cable companies, with help from the copyright maximalists in Hollywood, are still trying to corral the Net’s horse back into the old barn.)

What companies are doing with your personal data today is all happening inside a B2B — Business-to-Business — context. That context is as limited as mainframe thinking in 1980 and telco/cableco thinking in 1993.

The other day in London we were talking with Nic Brisbourne about the massive quantity of opportunity and ready-to-spend money on the demand side of the marketplace — and the ironic absence (outside the still-small VRM world) of interest by developers in equipping demand to engage and drive supply. The market seem stuck inside the same old supply-driving-demand mentality. That’s what you hear coming from the mainframe-think world of Big Data mongering and analytics today.

Mind these words: Big Data talk today is as clueless about what people can do for themselves as mainframe talk was in 1980 and networking talk was in 1993. It’s big business-as-usual, in its big B2B bubble, talking itself into ever-ripening stages of vulnerability to massive disruption by the C’s of the world.

Speaking of which, we also met in Europe with Qiy, MesInfos, MidataIntently, Mydex, Privowny and other VRM efforts (who will be insulted that I haven’t yet listed them here, but we can correct that). All of them are laying the groundwork required for unlocking the full use value of personal data — and not just its sale value, which is tiny at best anyway. Bravo for them, and for us as the beneficiaries of their good work.

The Internet of me and my things

Let’s say this key ring is yours and you’ve lost it.

If somebody scans the QR code with their smartphone, they will see a message from you. The message can say whatever you want (such as, “Help! I’ve misplaced these, please call or text me at this number”), and you can update it any time, because the information is in your personal cloud.

You can host your personal cloud yourself, or you can have it hosted elsewhere, such as at SquareTag, the brand name on the tag you see here. SquareTag is a service of Kynetx, the company behind the personal cloud concept. (Disclosure: I’m an advisor to Kynetx.) But you can use anybody’s. SquareTag is not a silo, and Kynetx is not out to trap anybody. Quite the opposite, in fact. Kynetx is out to give you tools to connect to your world of people and things.

Phil Windley is the co-founder of Kynetx and father of the personal cloud concept. In Personal clouds as general purpose computers, Phil says personal clouds are “the successor to the personal computer,” adding, “In the personal-cloud-as-personal-computer model, owners of a cloud control it in the same way they control their computer. They decide what apps to install, what services to engage, and how and where the data is stored.”

Most of the clouds we hear about today are the big centralized kind managed by companies such as Apple, Google and Amazon. Some of these industrial clouds are pure utilities, doing storage and compute work. That’s the case with, say,  Amazon and Rackspace. Nothing wrong with these, just as there is nothing wrong with electrical systems or storage facilities. Other clouds, however, are out to control you and your life — for both your good and theirs. Apple’s iCloud is one example. You can get it only from Apple, and it is not substitutable (as would be, say, a storage facility). In spite of the fact that Apple makes PCs and other personal devices, the company and its iCloud come from an old-school mainframe assumption: that one central server (or service) should contain and control what is done by many different clients. The technical term for this architecture is client-server. The vernacular term is calf-cow. You’re the calf. Apple is the cow. In the calf-cow system, you are always dependent, never fully independent.

With personal clouds you are independent. Your personal cloud is yours alone, to keep track of any thing, person or event in your life — and to manage your interactions with them. Such as, IF my keys are scanned, THEN display this message.

In an interview five years ago with Phil WindleyCraig Burton called every person an “enterprise of one.” In the past several years Phil and other developers (especially his colleagues at Kynetx) have been working on ways not only to make every person into that “enterprise of one” with connections to keep track of and control every thing of theirs as well. They are doing this through a general purpose platform called a personal cloud. You should have one, and so should the things you care about.

The design of the Internet in the first place is one of a boundless variety of end-points, with no central control of what those ends can do. Each is simply an address. Any end can connect with any other end. We have a similar system in the world called conversation. Anybody can talk with anybody else, or shake hands. They can also engage in business, and form relationships that last for moments or years. With personal clouds, things as well as people are brought into the Internet’s conversational and relational end-to-end system.

Take for example your car. Let’s say you put a SquareTag on the dashboard, next to the vehicle ID number. You can set up your car’s personal cloud so that all somebody scanning it sees is that it’s your car (or whatever you choose for it to say). But you can also scan the tag every time you have the car serviced, be taken to the car’s personal cloud, and enter whatever you like about the service event, or click on a private link that takes you (alone) back through your notes on the car’s service history. You can also set it up so the service station or dealer can connect their service records to yours, so when you look in your car’s personal cloud, you can also see those other service records. All you need for doing that are logical connections between the car’s tag cloud and the clouds of the other places where data is kept. With a squaretag, it isn’t necessary for any of your things to be “smart.” Instead the smarts are located in those things’ personal clouds.

There is no limit to what we can do with personal clouds because all of them are by nature independent, just as atoms are independent. And, just as certain kinds of atoms bond well with other kinds of atoms to form molecules, certain kinds of personal clouds (such as those of things we possess) will bond well with other kinds of personal clouds (such as human beings with possessions).

Likewise each of our personal clouds can, by mutual agreement, be social in the true and literal sense of the word — just as we are in the physical world. We won’t need to be social only inside corporate systems like Twitter’s and Facebook’s. There will still be administrative identities in the world (such as the ones on our drivers licenses and in employers’ HR systems), but among our sovereign selves we can choose to identify ourselves any way we wish. (Which others can, of course, accept or not.)

While personal clouds today are programmed with an open source language (KRL, for Kinetic Rules Language), and executed on an open source rules engine, what makes them interoperable are a new open standard: the evented API. Open standards are what allow closed (or open) things to connect and do things with each other. For example, it doesn’t matter whether you are reading this on a Linux, Mac, Windows, iOS or Android device. Open standards make it possible for all those things to communicate with each other.

We are at the earliest stage of where personal clouds will eventually go. What we can say with confidence, however, is that they will some day be the way each of us controls our lives, our personal data, our possessions, and our relationships with each other and our things.

We are born as sovereign beings, yet live in a networked world. The Internet as it was designed in the first place respected that. For most of the last two decades, however, we forgot that and built industrial-age systems that subordinated individual sovereignty and autonomy to the conveniences of large companies and governments. We built systems for capturing and controlling people and their things. There was lots of good stuff that could be done with these systems, but they were done at the expense of liberty and freedom for individuals and their possessions. Personal clouds not only promise that liberty and freedom, but provide the means for accomplishing it.

What we do with personal clouds is up to each of us — and to the countless new businesses that will show up to help out. When they do, you can bet a whole new boom of possibilities will show up too. The difference with this boom, however, is that each of us will be in charge of ourselves and what’s ours. That’s new. And it will never get old.

 

Wallets are personal

wallet-smallA lot of big companies are eager to get their hands in your pockets — literally. They want your mobile phone to work as a digital wallet, and they want the digital wallet app you use to be theirs.

Naturally, this looks like it should be a big business — and to some degree it is already. But it also hasn’t met promotional expectations. This became clear a few days ago, when comScore released Digital Wallet Road Map 2013, a $4995 report on the digital wallet business. In a press release highlighting the report’s findings, Andrea Jacobs, comScore Payments Practice Leader, said “Digital wallets represent an innovative technology that has not yet reached critical mass among consumers due to a variety of factors, including low awareness and a muddied understanding of their benefits.” Here’s how the release unpacks that:

The current digital wallet landscape remains fragmented among providers because of low consumer adoption outside of PayPal, with only 12 percent of consumers claiming to have used a digital wallet other than PayPal. However, study results indicated that the digital wallet market opportunity could eventually reach 1 in 2 consumers as consumers become more aware of the offerings and educated on their benefits.

Consumer Awareness and Usage of Digital Wallet Offerings
November 2012
Source: comScore Digital Wallet Road Map 2013
Digital Wallet Percentage of Total Respondents Aware of Digital Wallet Percentage of Total Respondents Who Used the Digital Wallet
PayPal 72% 48%
Google Wallet 41% 8%
MasterCard PayPass Wallet 13% 3%
Square Wallet 8% 2%
V.me by Visa 8% 2%
ISIS 6% 1%
Lemon Wallet 5% 1%
LevelUp 5% 2%

One clear barrier to use of digital wallets is that the concept is often difficult to convey and prone to misinterpretation. Even after being asked to review the websites of particular digital wallets, respondents across all wallet brands still scored an average of just 45 percent in terms of demonstrated level of understanding.

Here’s the problem: wallets are personal. Even if you have a wallet with a brand name on it (say, Gucci or Fossil), it isn’t their wallet. It’s yours. What you keep in it, and how you use it, are none of their business. In fact, those companies would never think of making it their business, because all they’re providing you is a place to put your credit cards, your cash, or whatever other flat things you feel like carrying around in your pocket or purse.

So far, all the digital wallets out there are not yours. They belong to some company. You merely use the app. The wallet is their business, not yours. In this respect they aren’t much different than credit cards or various loyalty cards, which are things you put in your wallet; not the wallet itself. The wallet itself should be agnostic, if not oblivious, to what you put in there. It should be like a toolbox, where you can store lots of different tools, made by lots of different companies, made for serving different purposes.

All the digital wallet companies in comScore’s chart have isolated, proprietary and silo’d ways of providing payment benefits to users. Imagine buying a tool box from Sears that could only hold its own brand of tools, which would only work with devices from companies that were partners of Sears. That’s what we have with digital wallets so far. It’s the same problem we had with online systems (AOL, Compuserve, Prodigy, etc.) before the Internet came along. They were closed silos.

The Net works because it is a general purpose system. It isn’t run by any one company. Likewise, PCs are also general purpose systems. The company making them doesn’t insist that it only works with certain other partner companies. In that respect it’s open, just like the wallet in your pocket or purse. Smartphones, on the other hand, are general purpose to a more limited degree. Apple tells you what apps can and can’t run on your phone. Google makes sure some of  its own apps (such as its wallet) run only on Android phones — or run better on Android than on Apple’s or other companies’ phones (as it did for years with Google maps for Apple).

I suggest that the digital wallet might be best thought of as something that’s part a general-purpose thing called the personal cloud.

Your personal cloud is your personal space, which you run for yourself in the networked world. In it you define the ways that your personal data interacts with the world of things, and of services from companies and other entities. That may sound complicated, but it’s actually no different than the personal space you call your house, your car, and your body. In fact, you can think of a personal cloud as something akin to all three, but in the networked world rather than in the physical one. For more on this read Phil Windley, starting here; and follow what Kuppinger-Cole says about Life Management Platforms (which I recently visited here).

So, to sum up, the main thing wrong with digital wallets today isn’t what they do. It’s that they are called “wallets.” Instead they should be called what they really are, which is payment services. (Yes, they do more, but the main thing they do is facilitate transactions.)

The notion that something so personal as a wallet should be provided for you, as a service, by a company, is typical of the calf-cow thinking that has dominated computing for the duration. There is nothing wrong with this, if it’s still 1995. But it’s now 2013, and it’s time we moved on. And, to do that, I’d like to see real digital wallets — personal ones — come up as a feature of personal clouds. So, let the conversation begin. Then the development.

Bonus link: Google’s Wallet and VRM.