Personal data is worth billions. These startups want you to get a share

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Frank McCourt showed up in front of an 8-foot-high screen, summoning a cluster of what looked like white, pixelated sand that floated beside him. When he moved his hand to another screen, another group appeared; this time the glittering particles took on the shape he drew. Walking along the screen, he swept his arm to reveal his hidden message: “YOU ARE IN CONTROL OF YOUR DATA.” “

The billionaire real estate mogul was in Manhattan’s Hudson Yards neighborhood in September to show off an art exhibit he funded to demonstrate a new model of consumer data. Each digital point represented a point of data that social media companies collect on it. The first screen depicts today’s model: Social media, search, and online retail companies capitalize on the insights of consumers, who don’t own their data and see little return on the value they have. they create with their clicks. Personal data drives the $ 455.3 billion digital advertising market. The second screen represented Mr. McCourt’s vision, where people own their data and control how it is sold and used by businesses.

“An unprecedented amount of value is created by everyone’s data. And yet there is a complete disconnect between creating that value and who receives it, ”says McCourt.

Mr. McCourt is one of a handful of business leaders, politicians and startups, such as Brave Software Inc., Reklaim Ltd. and Streamlytics Inc., seeking to empower consumers to control and benefit from the personal data that the tech industry collects about individuals every day. He pledged $ 250 million to found Project Liberty, an initiative to rebuild the Web as publicly owned infrastructure. This includes $ 25 million to develop a decentralized social network protocol, which he hopes will create a model for the governance of personal data online. Mr McCourt, whose background is in real estate and sports property, says he has had to try to reform the tech industry because of what he sees as the exploitation of users by social media.

In his vision, blockchain software, which does not belong to anyone, would store indelible information about users’ social connections. After getting permission from users, social media companies would tap into that same pool of data on user connections and interactions. Theoretically, this would allow users to move their data between networks and prevent a single company from becoming too powerful. Users could be paid in a cryptocurrency for the use of their data. For example, a user might choose to share posts within a small community that might set their own policies on data monetization, content moderation, and other factors. Eventually, apps for other online activities, such as shopping, could be built on the same technology, with users able to exercise the same control.

Users who make their data available to as many companies as possible could in theory make a few hundred dollars a year, says Braxton Woodham, president of Unfinished Labs, the arm of Mr. McCourt’s investment firm. , McCourt Global Inc., behind the Liberty project. His business case isn’t about promising users they’ll get rich, he says, but about avoiding exploitation. Mr. McCourt, who owned the Los Angeles Dodgers, started Project Liberty in 2020. He remains President and CEO of McCourt Global.

The path to his vision is not clear. “The problem with these networks is not making them work” technologically, says Ethan Zuckerman, associate professor of public policy information and communications at the University of Massachusetts at Amherst. The problem is convincing enough users to leave existing social networks, he says. Social media companies are optimizing their networks to keep users there. Would a decentralized social network be so sticky? Additionally, blockchain technology tends to make the web slower and more expensive, he says.

Politicians like California Gov. Gavin Newsom and former New York City presidential and mayoral candidate Andrew Yang have floated the idea that consumers should be paid for their data. Some 60% of those polled in a Project Liberty poll of 1,022 American adults in September said they would keep their data private if they owned and controlled it, while 23% would exchange it for something of value. .

Some startups are already putting this into practice. The Brave browser pays its 42 million users 70% of the revenue it generates from the ads they see. Brave pays them in their own “Basic Attention Tokens,” which they can redeem for cash or use to tip their favorite sites. Users report earning $ 5 to $ 10 per month, according to a spokesperson for Brave.

Foursquare Labs Inc., the social registration app turned location aggregator, launched an app in August that rewards consumers with gift cards for sharing their location. Tapestri Inc. launched an app in November that pays consumers cash to share their anonymized location history, which the startup then sells to brands. Users can earn up to $ 15 per month, according to Tapestri founder and CEO Walter Harrison. Tapestri users can’t control which companies buy their data, but the company hopes to add this functionality, Harrison said.

Reklaim, for example, gives users insight into what information the industry is buying and selling on them. When a user signs up with Reklaim and verifies their identity, the company uses their email address or phone number to interview some 30,000 partners for data on that person, and then shows it to them. If users want to let Reklaim sell this data on their behalf, they receive weekly checks as compensation. They can also take surveys to add more data to their Reklaim profile and get better paid. Some consumers earn up to $ 10 per month through the app.

Much of the data consumers see about themselves in Reklaim is inaccurate, admits chief executive Neil Sweeney, because it is often the result of assumptions made about the consumer without direct verification. Consumers can correct this data, making it more valuable to brands that purchase data from Reklaim.

Today, efforts to bring consumers under control are limited. A world where they are paid for their data is distant and fraught with challenges, such as luring users into new tools and disrupting the existing market for data ownership, which spans both established social media companies and brokers. in data that operates without transparency.

Some startups take advantage of privacy laws that require companies to make all the data they have about them available to consumers, a process that can be tedious and time consuming for the user. Three-year-old startup Streamlytics has an app called Clture, which pays black users for their data from sites like Netflix, YouTube, Amazon, Uber, and Google Maps. Users can download their data from these sites and then upload it to Clture for cash. Streamlytics removes personally identifying information from users and sells the data to businesses looking for information on black consumer habits. Streamlytics plans to launch additional apps focused on other communities.

“There are a lot of companies that are making a lot of money with the African American community, especially around different things that go viral,” says Angela Benton, Founder and CEO of Streamlytics. “It never really gets fed back into the community.”

Streamlytics decides the value of an individual user’s data using an algorithm that takes into account the market performance and market capitalization of the company from which the data originated. Streamlytics’ payments can run up to a few hundred dollars per quarter for users who maximize the service, says Benton.

“If you’ve got a trillion dollar business and a lot of that business is built on intrinsic data, the data that supports that business is worth more than, you know, a dollar or two dollars,” says Ms. Benton. .

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