NEW YORK - Facebook’s pending initial public offering gives credence to the argument that personal data is the oil of the digital age. The company was built on a formula common to the technology industry: Offer people a service, collect information about them as they use that service, and use that information to sell advertising.
People have been willing to give away their data, while the companies make money. But there is some momentum for the idea that personal data could function as a kind of online currency, to be cashed in directly or exchanged for other items of value. A number of start-ups allow people to take control, and perhaps profit from, the digital trails they leave on the Internet.
“That marketplace does not exist right now, because consumers are not in on the game,’’ said Shane Green, who founded a company called Personal in 2009.
The idea behind Green’s company involves two steps. First, his team created a series of personal data vaults, which contain thousands of data points about its users, which the company calls owners. This data can be as prosaic as birth dates or as specific as someone’s preference for spicy foods. People control what information they share and remove data they don’t want to share at any time.
The problem is that companies don’t need to pay for the information when they get it free.
“The killer app isn’t here yet,’’ said William Hoffman, who is working on a multiyear study of the economics of personal data for the World Economic Forum. But with increased consumer awareness of the value of that information - Facebook could be worth as much as $100 billion - that may soon change. “I’m willing to bet that within the next 12 months something big will catch on,’’ he said.
The concept of treating data like currency has long excited certain computer programmers and academics. But to almost everyone else, it is boring. Personal data management has none of the obvious appeal of social networks or smartphones. But concerns about privacy may be changing that, Hoffman said.
Many of the new ideas center on a concept known as the personal data locker. People keep a single account with information about themselves. Businesses would pay for this data because it allows them to offer personalized products and advertising. And because people retain control over the data in their lockers, they can demand something of value in return - maybe a discounted vacation, or a cash payment.
Proponents of personal data lockers see them more than simply a solution to privacy concerns. They hope that people will share even more information if there is a market for it.