In my discussion of the Internet of Things (IoT) a few weeks back, I mentioned that there was a big push underway to put sensors in farm fields to collect and monitor soil conditions as a way to optimize fertilizer application, planting dates, etc. But who would be the owner of this information, which everyone in agriculture believes to be exceedingly valuable? Apparently, this is far from decided. An association of farmers, The Farm Bureau, recently testified in Congress that it believes that farmers should have control over this data, and indeed should be paid for providing access to it.
We’ve heard this notion advanced in many different contexts over the past few years. Many consumer advocates maintain that consumers should be compensated by third parties who are accessing their data and generating revenue from it.
Generally, this push for compensation centers on the notion of fairness, but others have suggested it could have motivational value as well: if you offer to pay consumers to voluntarily supply data, more consumers will supply data.
The notion of paying for data certainly makes logical sense, but does it work in practice? Usually not.
The first problem with paying to collect data on any scale is that it is expensive. More times than not, it’s just not an economical approach for the data publisher. And while the aggregate cost is large, the amount an individual typically receives is somewhere between small and tiny which really removes its motivational value.
The other issue (and I’ve seen this first-hand) is the perception of value. Offer someone $1 for their data, and they immediately assume it is worth $10. True, the data is valuable, but only once aggregated. Individual data points in fact aren’t worth very much at all. But try arguing this nuance to the marketplace. It’s hard.
I still get postal mail surveys with the famous “guilt dollar” enclosed. This is a form of paying for data, but it drives, as noted, off guilt, which means undependable results. Further, these payments are made to assure an adequate aggregate response: whether or not you in particular respond to the survey really doesn’t matter. It’s a different situation for, say, a data publisher trying to collect retail store sales data. Not having data from Wal-Mart really does matter.
Outside of the research world, I just haven’t seen many successful examples of data publishers paying to collect primary source data. When a data publisher does feel a need to provide an incentive, it’s almost always in the form of some limited access to the aggregated data. That makes sense because that’s when the data becomes most valuable: once aggregated. And supplying users with a taste of your valuable data often results in them purchasing more of it from you.
The Internet of Things (IoT) is, as buzzwords go, pretty easy to understand: it describes the concept of connecting things (other than computers) to the Internet. You may have heard one popular example of IoT in the not-too-distant future, when your Internet-connected refrigerator determines your orange juice is running low, and automatically places an online order to have more delivered to your doorstep. We’re a bit away from this scenario, but inching closer every day. The automobile companies in particular have been actively exploring ways for your car to alert you via email or text when it needs service or other attention. This is a clear, obvious and powerful example that you’ll soon see in dealer showrooms.
But is IoT strictly a consumer phenomenon? I think not. There are potentially huge opportunities to bring the concept of IoT to the world of business. And I think the data that can be collected by these devices will in many cases by organized and sold by data publishers.
As I have said repeatedly, data publishers are natural organizers of data for vertical markets because they’re neutral, trusted players in their markets and importantly, they’re already doing it. Moving from tracking a company and its people to tracking the location of a company’s equipment really isn’t that big a stretch. Consider Lloyd’s that tracks the exact position of all cargo ships at sea and Drilling Information, that tracks the location of drilling rigs. There’s a lot of value in knowing where things are if someone needs fast access to them. Extend that thinking a little bit, and you can start to see the opportunities. And some data is even more valuable when it is centralized and organized. That’s the traditional role and strength of data publishers.
Another tantalizing example can be found in the 2010 Model of Excellence company Spiceworks. This company offers software that helps companies manage their computer networks – and everything connected to them. Spiceworks not only knows the make and model of every printer owned by hundreds of thousands of companies, it even knows when they’re running low on toner, and all in real-time. Think of how many different ways you could monetize data like this! And as just one more example, there’s a big push in agriculture right now to use sensors that monitor moisture and other conditions in farmers’ fields. We’ve moved rapidly from first collecting information about farms, to collecting information about the crops produced at these farms, to collecting information about the soil that produces the crops at these farms. It’s about as granular as you can get, and best of all, it’s collected by devices and sensors meaning low cost and high accuracy.
Of course, not every shipping company or farmer will want to have the intimate details of their businesses tracked and reported to others. But here again, a central repository can return valuable data to those who contribute, including performance benchmarks or other useful trend data. Indeed, that’s the big goal driving the push for electronic health records – the ability to tap into large pools of data to find patterns that will make healthcare providers smarter and more productive.
The Internet of Things really is as big as our imaginations and it’s happening now. And like so many things on the Internet, the biggest opportunities go to those who move fast and early. That too is an Internet thing.