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Tuesday, 28 May 2013

Do established economic models apply to data, and will they spread wealth, or is Jaron Lanier wrong?

Jaron Lanier's article on the BBC is really worth reading.  His is the first mainstream article in a while that has got me wrestling with my instincts on big data, privacy and digital democracy.

I agree with a many of his observations.

Yet I disagree with his primary thrust, that "open" has backfired and instead created a new data inequity; and, controversially:
"monetising information will bring benefits that far outweigh the inconvenience of having to adjust one's worldview."
That there is a new power "asymmetry" is undoubtedly true.  I wrote about the new data plutocrats just a fortnight ago.

But would monetisation of our data have worked any better?  

I argue not.  I believe the largely cashless and open information society emerging over the last two decades was a necessity in order to overcome intransigence and challenge the existing economic power balance; and that, had our data been monetised along the lines suggested by Lanier, we'd be far worse-off today.

Had data been monetised, the primary beneficiaries would have been those who currently control the money supply; "data" power would be controlled by those who already wield a great deal of economic power, and democracy would have suffered.

Essentially, Google and gang have emerged, warts and all, to counter the dominance of not just the more established technology companies but also the big banks, and even governments.

Not that I don't foresee severe problems ahead with the path we're now travelling, most of these problems adequately covered in his article.

But, for the time being at least, the old economy tempers Google's power just as Google threatens the old economy.

Inherent constraints of cash

Perhaps, even more importantly, monetising data might have constrained innovation because there is not [yet?] an effective mechanism for setting a price on such a rich and nuanced commodity.

What's a Tweet worth? How much should I be paid, or pay, to participate daily in Facebook? Is my social capital worth anything?.. To me?.. To you?

Such questions may prove unanswerable because the concept of money a hundred millennia old has its limitations.

It may simply prove impossible to create a market that accounts for the diversity of the information economy and its many applications: from furtherance of knowledge to private and personal sharing to providing transparency of governments.

And attempting to do so in a flawed way may derail rewarding but otherwise economically non-viable data services.

For it is possible for us to be getting monetarily poorer and richer at the same time when our lives are getting richer in other ways, even as the 'real' economy stagnates.

Data, and with it, cheap access to communication tools, undoubtedly enrich our lives, and this is both the reason data is hard to monetise and the foundation of the data bartering Larnier sneeringly dismisses as "usually associated with the developing world."

Instead of trying to shoehorn data into GDP we should be looking to an evolution of money to measure our overall wealth, and also to restore equity to contributors and remunerate "workers" - something Lanier correctly notes as absent today.

A Necessity: the Open sledgehammer

As well as overlooking the limitations of money, Jaron Lanier fails to address the positive and necessary role the Open movement played in challenging the inertia present in any stable society.

When I started my career in software in the mid 90's there were sizeable barriers to entry.

Firstly, the software tool chain was largely closed, and licencing costs were huge.  A handful of then-dominant global corporations controlled access to most platforms. (In a way that Apple does, albeit with much lower barriers to entry for developers, today.)

To get [legal] access to a software compiler and the rest of the development kit (SDK) companies had to fork out thousands.  Add to that: revision control software, a defect tracking database, operating system licenses for servers and worksations, etc, and you were talking considerable start-up costs.

It was a system that actively prevented the kind of "bedroom innovation" that has created revolutionary apps and services in the last two decades.

In fact, for a while at least, innovation throughout the sector seemed to stall as larger tech companies, in the absence of serious competition, took their foot off the gas in order to consolidate.

Some large corporations placed emphasis on pursuing licensing revenue for existing products above investing in product innovation, choosing to pursue patent and other IPR infringement at the expense of developing better software.

It really was a frustrating time - at least through the eyes of a twenty-something-year-old.

Developers were left with buggy, feature-void tools.

Smaller companies in particular hesitated to buy the latest software.

And suddenly, innovation was threatened on every front: big companies wanted to return a dividend to their investors, smaller companies were stuck doing things the hard way and tiny companies couldn't even afford to enter the market.

Around that time many in my position had been exposed to Linux and the Open Source movement at schools and universities (Slackware for me, circa 1994).

Before long I could build bigger and better software on my home-built server (primarily around Apache and Perl or related CGI scripting language) than I could using the licensed tool-set my company paid for at work.

In asserting that we may have denied ourselves something even better by turning our back on monetisation overlooks how and why we are where we are now and  fails to acknowledge necessity - the driving force for many open source projects.


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