More on the Importance of Social Data

On the Harvard Business blog, Andreas Weigend writes:

During the first data revolution, successful companies gained power by collecting, aggregating, and analyzing the customer data they collected. However, most companies did not know what to do and ended up burying their data in tombs.

Today, the online world has shifted to a model of collaboration and explicit data creation. Successful firms develop systematic ways to encourage and reward users who contribute honest data. A good system does not try to trick customers into revealing demographics or contact information that is useful for the company. Rather, it rewards users with information that is useful to them.

The center of the universe has shifted from e-business to me-business. Customers are also starting to discover and interact with each other. Knowing that they are not alone has shifted the balance of power from companies back to consumers. And they have begun to demand transparency. Customers are beginning to have a voice. They are realizing that the data they voluntarily contribute can help them and others with making decisions, providing true value. In turn, they want to be treated fairly as individuals by the companies they pay attention and money to.

See also: Transparency is the new objectivity.

As the expectations of users change, firms must spend more time developing incentive systems that will entice more users to participate.

See Techdirt's CwF + RtB.

These statements by Andreas Weigend relate back to my article entitled User data is the currency of the web.

'Transparency is the New Objectivity'

Some interesting ideas to ponder from http://www.hyperorg.com/blogger/2009/07/19/transparency-is-the-new-objectivity/

... during a bloggers press conference at the 2004 Democratic National Convention, I asked Pulitzer-prize winning journalist Walter Mears whom he was supporting for president. He replied (paraphrasing!), 'If I tell you, how can you trust what I write?,' to which I replied that if he doesn’t tell us, how can we trust what he blogs?

... What we used to believe because we thought the author was objective we now believe because we can see through the author’s writings to the sources and values that brought her to that position. Transparency gives the reader information by which she can undo some of the unintended effects of the ever-present biases. Transparency brings us to reliability the way objectivity used to.

... credentials and authority work best for vouchsafing commoditized knowledge, the stuff that’s settled and not worth arguing about. At the edges of knowledge — in the analysis and contextualization that journalists nowadays tell us is their real value — we want, need, can have, and expect transparency. Transparency puts within the report itself a way for us to see what assumptions and values may have shaped it, and lets us see the arguments that the report resolved one way and not another. Transparency — the embedded ability to see through the published draft — often gives us more reason to believe a report than the claim of objectivity did."

'Media companies are in the service business, not the content business'

From O'Reilly:

"... what you're selling as an artist (or an author, or a publisher for that matter) is not content. What you sell is providing something that the customer/reader/fan wants. That may be entertainment, it may be information, it may be a souvenir of an event or of who they were at a particular moment in their life (Kelly describes something similar as his eight 'qualities that can't be copied': Immediacy, Personalization, Interpretation, Authenticity, Accessibility, Embodiment, Patronage, and Findability). Note that that list doesn't include 'content.' The thing that most publishers (and authors) spend most of their time fretting about (making it, selling it, distributing it, 'protecting' it) isn't the thing that their customers are actually buying."

User data is the currency of the web

In a recent PC World article analyzing the potential effects of Google Chrome OS, Keir Thomas states:

Money isn't the currency of the Internet. Data is. Micropayments aren't made in cents or pennies, but in details about your shopping habits, or where you plan to go on vacation.

Content and information are no longer scarce, and therefore have little value. Scarcity now exists in the data produced by users in the form of demographics, geo-location and personal interests, all of which are time-sensitive.

Collecting and analyzing this data will provide value to businesses who wish to provide services at the right time in the right place.

A quick example: You need to leave work at 5 pm, but have a meeting at another location at 6 pm. Where can you get a quick yet nutritious dinner between the two without being late? What routes have both a meal and light traffic? Oh, and you're a vegetarian. Your apartment is on the way to the next appointment, do have have some leftovers in the fridge?

This example may seem trivial but play the idea out across multiple situations and time-frames. To anyone who understands the nature of data and the potentials inherit in it's analysis, the possibilities are endless.

The hurdle is our culture. Few are willing to provide enough detail about their personal lives to allow data-oriented services to suggest such information. Or are they? "What are you doing?" asks Twitter. "What's on your mind?" asks Facebook.

Future generations, who will have grown up in a world where information scarcity no longer exists, will create a culture that strengthens the value of data analysis.