Woman using mobile payments online shopping

For a while, data minimisation looked as if it might be the future for businesses and consumers. Yet it left no one satisfied – as a result, we are starting to see a new model emerge, a model which places power in the hands of the consumers – data commoditisation.

Predicting the future of data

Back in 2020, I wrote an article predicting a change in the way businesses and consumers would trade in data. You can read the article, Consumers hold the power in new internet era, here.

Writing in Spring 2022, we are starting to see a shift towards this model being rolled out, the prediction is coming true.

It was not always clear that this would be the case. Over the past few years, there have been some significant data trends. For example, there has been a growing trend amongst businesses for data commoditisation.

Data minimisation – what is it?

Data minimisation involves a business capturing only the minimum data needed to fulfil a service. This is the opposite of what use to be the common practice, e.g. organisations collecting as much data about users as they possibly could.

For example, it is not uncommon for a smart phone casual gaming app to want access to a users location, contacts, details of other apps stored on the phone etc. Access to such data has zero impact on the service being provided, it simply helps the app provider generate revenue from data.

Gone are the days in which consumers would happily trade their data in this way. As consumers became more savvy, they became less willing to provide their data to everyone all the time for any purpose.

Does data commoditisation provide a better service?

Out of this trend emerged the principle of data minimisation. However, whilst this will work in many scenarios, it can be stifling. It can take away from an organisation’s legitimate use of data and can even have a negative impact on the service being provided.

As such, data minimisation can be a blunt tool, solving the ethical and legal issues around data use but not satisfying either the business or the consumer.

Many consumers are indeed happy for their data to be used, provided it enables them to benefit  from a better service or finished product. Think for example of those online shopping recommendations which, when they work well, can introduce you to products which you otherwise would not have known about.

What was needed then, was a shift in the bargain being struck between consumers and the businesses who are hungry for their data. There will be many cases where a consumer is happy for their data to be used or stored if it have a positive impact on them.

The principle of consumer power over data commoditisation shift this bargain further, empowering consumers to agree to the use of their data in return for more than just access to services.

Data commoditisation in practice

A high profile example of this trend in action is the Amazon Shopper Panel scheme. Under this scheme, invited users are encouraged to upload details of their spending in retail outlets (other than Amazon) and to answer surveys. In return, consumers can earn vouchers to spend on Amazon.

This marks a real shift from data commoditisation which, in its early days, was around consumers having access to additional goods or services in return for data. Now, consumers can earn vouchers for the same thing.

Of course, whether this is a good deal will depend on each consumer’s view point but, for businesses, this opens up an exciting new frontier.

Where next?

An interesting space to watch will be how information uploaded by individuals to social media platforms will impact a consumers ability to commoditise their data. For example, if someone has, over years of social media engagement, shared their personal data widely, will this still have a value – will companies pay for access to this data when they can obtain it elsewhere for free?

A natural extension of this would therefore be a shift towards consumer data asset planning. In the same way consumer would look after other assets of value, we could see a whole industry around building and preserving data asset value.

All of this is another example of how, for businesses who engage meaningfully with the data protection regime, new and exciting avenues are opening up all the time.