Another good post here. You've been on a roll lately and it seems that you and Matthew Ingram are a good virtual tag team. Makes for good reading.
John Furrier
· 1 year ago
Scott, I've been reading your blog. Good posts and you're never shy to talk about the tough topics.
However on this one Umair all wet data is *not* a commodity. Umair has to take his head out of his "Porter five forces" text book and smell the coffee. I like Umair's analysis but here he's way off base.
Data is not a commodity. Ask Google why they love their toolbar and love their data from those hundreds of thousands of servers. Do you think they can sell it to me? Oh wait its a commodity so I'll just duplicate their data.. not.
Keep posting
Simon Cast
· 1 year ago
In general I agree with the thrust of what Umair is saying.
Consider the following reasoning. Data is a commodity in the sense that the initial value of the data does not represent the final value of what can be done with the data. Consider a house. The value of the wood etc in the house is not the same as the final value of the house. The final value of the property is determined from the utility of the house to prospective occupiers.
Data has no intrinsic value in and of itself. The value only arises from the combination with other data and what you can do with it. Which dovetails with the concept that freer for data to be re-combined with other data the more value can be created. As you mentioned Scott, the web is progressing to the creation of ecosystems to re-combine data in new and a different ways. In which value creation is limited solely be the ingenuity of people to re-combine data from all sorts of sources even other data ecosystems.
In John Furrier's example of Google Toolbar data, the data still has no intrinsic value. The value derives from what the Googlers can do with the data. What conclusions and knowledge that draw from analysing the data in context. Difficultly of getting data should not be confused for value. Metals are still a commodity despite how difficult it may be to extract the metal from various environments.
Michael
· 1 year ago
Nicely done Post !
Kevin Gamble
· 1 year ago
I've read your post a couple of times, and I'll be darned if I can see how you aren't making the exact same point that Umair makes.
Think about it this way: the lower the cost of interaction, by definition, the more abundant data is - because every interaction creates reams of data. More data is created tomorrow than was created yesterday. And so on.
What is valuable are the things that create data: markets, networks, and communities.
Leigh
· 1 year ago
We have allowed data to be perceived as a commodity because in general we have been willing to have a value exchange between the product and/or service and our data.
However, the medium itself is immature. We are only at the beginning of our understanding of the relationship we have with/to our OWN data. As our connection to our selves becomes more exposed and transparent I expect our perceptions of our data usage will mature - and by consequence our willingness (or not) to be used as tool for other people's monetary gains will morph and change...
Brian Clark
· 1 year ago
Great post Scott. I enjoy Umair's thoughts quite a bit, but he had me scratching my head with this post.
Consider a house. The value of the wood etc in the house is not the same as the final value of the house. The final value of the property is determined from the utility of the house to prospective occupiers.
Simon, this is an apt analogy. Even if data itself can be viewed as a commodity (and just as with housing materials, some data is more commodity than other data), it's still an indispensable element and building block of a whole lot of valuable objectives.
Umair's position seems to forget that there's been a whole lot of investment in extracting insight from reams of data by those who possess it, and this provides the data aggregation companies an incredible market advantage.
The question of "who owns the data" seems as silly as asking who owns two copies of the same mp3. Once information is reduced to bits and shared, "ownership" is moot, and value extraction becomes the only meaningful criteria.
somaking
· 1 year ago
Creative expression is a type of personal data that's not a commodity. In fact it is one of the most prized forms of web-based data because it is a major traffic driver.
Scott Karp
· 1 year ago
Kevin,
He's my caveat to Umair:
Data on the open web becomes a commodity because it's abundant. Data that is not on the web yet has more value because it can't be leveraged by applications on the web, including Google.
The value of Facebook is in its ability to bring data on the web.
So while data is experiencing a commoditization, some data is still more valuable than other data.
Ryan Holiday
· 1 year ago
Keeping in line with Umair's new definition of data, I think that it reaffirms whoever said (I believe it was Scott) that a social network isn't about who is on it, it's about who is NOT on it.
The endeavor for networks/sites/blogs isn't to collect as much data as it can possible get its hands on but to collect data that it can DO something with. Like the house analogy, a foreman doesn't just pile up a stack of wood and try to build something out of it. He gets the specific wood that he needs.
The old idea that you start niche and then mellow out so you can appeal to the middle might not work in that new paradigm.
MobileCapitalist.com
· 1 year ago
Is data commodity or strategic asset? For me the answer is simple - It depends on the "TYPE of data".
User data is a strategic asset. There is no question that data is the foundation of any consumer internet service. Take yahoo as an example. They have a chief data officer that represents data as a strategic asset at the executive level.
on the other hand, financial data of a public company is now commodity. Thanks to the digital revolution and the web.
Simon Cast
· 1 year ago
Don't confuse difficulty of getting data with the value of data. The difficulty (or cost) of getting the data does not reflect the value of data. Lets consider movie preferences. How ever you get the preference data (via a host cost method such as surveys or a lost cost method such as Facebook) on its own the preference data has no value. The value only comes from combining it with other data (such as demographic breakup of movie preferences) and then acting on the insights from the data combination.
Facebook et al simply reduces the cost of gathering data. At this stage you can argue that is where the companies value lies. But note that is not value driven by data but value of the cost savings Facebook provides to data users. Kevin made the point about data aggregations the value they bring, but again this is not about the value of the data but simply the transactional cost savings for end users.
Kevin noted that Umair was dismissing the value of insight gain from data. I don't think he is (but Umair can correct me if I am wrong). Insight and action on the insight is where the value lies. Umair is simply saying the underlying data is a commodity. I would go so far as to say it has no intrinsic value.
Whether the data is used for strategic analysis or not does not grant value to the data. Its the insights and action taken on those insights where the value lies. Its worrisome that Yahoo needs a Chief Data Office to represent the value of data. Every single senior executive should be drawing insights from data that is relevant to them.
When saying that data has no intrinsic value, that is not to say it is not important to what is being done. Rather, that the value arises not from having the data but from having the right data and combining that with the right other bits of data to produce insights and outcomes. Its the action and not the object that has value.
Leigh
· 1 year ago
@Simon makes a great point. If you think about the current amount of customer data on Corporate websites that sits there idle not because it *couldn't* have a value but because the effort/complexity to create meaningful business value up to this point has not been enough of a driver to put significant effort against it - particularly as many corporations are struggling through their over burden of understanding and making actionable the actual customer data they already have.
I suspect the Google/DoubleClick merger and what they end up doing with all that "data" will blow this entire debate wide open much more so than Facebook or closed networking sites ever could....as they will have a missing link between a gazillion publisher sites and the open web.
All Comments
However on this one Umair all wet data is *not* a commodity. Umair has to take his head out of his "Porter five forces" text book and smell the coffee. I like Umair's analysis but here he's way off base.
Data is not a commodity. Ask Google why they love their toolbar and love their data from those hundreds of thousands of servers. Do you think they can sell it to me? Oh wait its a commodity so I'll just duplicate their data.. not.
Keep posting
Consider the following reasoning. Data is a commodity in the sense that the initial value of the data does not represent the final value of what can be done with the data. Consider a house. The value of the wood etc in the house is not the same as the final value of the house. The final value of the property is determined from the utility of the house to prospective occupiers.
Data has no intrinsic value in and of itself. The value only arises from the combination with other data and what you can do with it. Which dovetails with the concept that freer for data to be re-combined with other data the more value can be created. As you mentioned Scott, the web is progressing to the creation of ecosystems to re-combine data in new and a different ways. In which value creation is limited solely be the ingenuity of people to re-combine data from all sorts of sources even other data ecosystems.
In John Furrier's example of Google Toolbar data, the data still has no intrinsic value. The value derives from what the Googlers can do with the data. What conclusions and knowledge that draw from analysing the data in context. Difficultly of getting data should not be confused for value. Metals are still a commodity despite how difficult it may be to extract the metal from various environments.
However, the medium itself is immature. We are only at the beginning of our understanding of the relationship we have with/to our OWN data. As our connection to our selves becomes more exposed and transparent I expect our perceptions of our data usage will mature - and by consequence our willingness (or not) to be used as tool for other people's monetary gains will morph and change...
Simon, this is an apt analogy. Even if data itself can be viewed as a commodity (and just as with
housing materials, some data is more commodity than other data), it's still an indispensable element and building block of a whole lot of valuable objectives.
Umair's position seems to forget that there's been a whole lot of investment in extracting insight from reams of data by those who possess it, and this provides the data aggregation companies an incredible market advantage.
The question of "who owns the data" seems as silly as asking who owns two copies of the same mp3. Once information is reduced to bits and shared, "ownership" is moot, and value extraction becomes the only meaningful criteria.
He's my caveat to Umair:
Data on the open web becomes a commodity because it's abundant. Data that is not on the web yet has more value because it can't be leveraged by applications on the web, including Google.
The value of Facebook is in its ability to bring data on the web.
So while data is experiencing a commoditization, some data is still more valuable than other data.
The endeavor for networks/sites/blogs isn't to collect as much data as it can possible get its hands on but to collect data that it can DO something with. Like the house analogy, a foreman doesn't just pile up a stack of wood and try to build something out of it. He gets the specific wood that he needs.
The old idea that you start niche and then mellow out so you can appeal to the middle might not work in that new paradigm.
For me the answer is simple - It depends on the "TYPE of data".
User data is a strategic asset. There is no question that data is the foundation of any consumer internet service. Take yahoo as an example. They have a chief data officer that represents data as a strategic asset at the executive level.
on the other hand, financial data of a public company is now commodity. Thanks to the digital revolution and the web.
Facebook et al simply reduces the cost of gathering data. At this stage you can argue that is where the companies value lies. But note that is not value driven by data but value of the cost savings Facebook provides to data users. Kevin made the point about data aggregations the value they bring, but again this is not about the value of the data but simply the transactional cost savings for end users.
Kevin noted that Umair was dismissing the value of insight gain from data. I don't think he is (but Umair can correct me if I am wrong). Insight and action on the insight is where the value lies. Umair is simply saying the underlying data is a commodity. I would go so far as to say it has no intrinsic value.
Whether the data is used for strategic analysis or not does not grant value to the data. Its the insights and action taken on those insights where the value lies. Its worrisome that Yahoo needs a Chief Data Office to represent the value of data. Every single senior executive should be drawing insights from data that is relevant to them.
When saying that data has no intrinsic value, that is not to say it is not important to what is being done. Rather, that the value arises not from having the data but from having the right data and combining that with the right other bits of data to produce insights and outcomes. Its the action and not the object that has value.
I suspect the Google/DoubleClick merger and what they end up doing with all that "data" will blow this entire debate wide open much more so than Facebook or closed networking sites ever could....as they will have a missing link between a gazillion publisher sites and the open
web.