Since we are now firmly in the era of big data and data-dependent business models, it makes sense to think of Data as the new gold. The collection and monetization of data is part of the business model of virtually every business online.
Think of the last time you browsed a news site that didn’t ask you for your permission to leave various cookies on your computer (or inform you that was what it was doing). Below are a number of metaphors which help explain why Data is the new gold.
Like Gold, Data is Precious
Like Gold, data is precious. Its protection needs, however, are even more sensitive. This is for two reasons.
Firstly, data is not merely an inanimate element that human beings have chosen as a means of storing value. Data represents information about and insight into the personalities of real human beings all over the world. Secondly, the cybersecurity threats are much more numerous and omnipresent than the threats to physical gold. Businesses face very real threats of hacking and theft online all the time.
Just as governments around the world go to great lengths to secure and protect their gold reserves, so too should any business collecting, utilizing or trading in data ensure what it mines is well looked-after. Choosing the right data centre, with the right host of security (from infiltration, from natural disasters), is a crucial part of business online.
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Like Gold, Data is Convertible to Profit
Data, synthesized into actionable information, equals revenue. This is an increasingly large component of the business models of a diverse array of companies. Like gold pulled out of the ground, data is convertible to profit in two main ways: it can be sold raw or processed into a finished product.
Companies can either collect data and use it to better understand their customers, providing them with more meaningful advertising and purchasing opportunities; and/or they can sell their data to others. In the latter case, an increasing number of so-called “data brokers” purchase bulk data from innumerable apps that it then sells to advertisers who use it to better target consumers.
Like Gold, Everyone is Rushing to Mine it
The gold-data analogy is, understandably, a common one for several reasons. One of the most obvious, however, is that the rush to mine and collect it is highly similar to gold rushes of bygone eras. With the recognition that data equals profit, everyone wants to strike it rich.
Data is no longer just an additional tool that companies (new and established) are making an ancillary part of their overall business model, but it is now critical to success. There are currently an estimated 27 billion connected devices around the world, with that number expected to grow to around 125 billion by 2030. There is gold out there to be mined, companies are turning huge profits because of it, and people know it.
Like Gold, Processing it Adds Value
Virtually everything a person does online–from the websites they visit, the things they purchase on Amazon, to the people and posts they interact with on social media–generates a data point. Like gold, this information is intrinsically valuable and there is often someone willing to buy the raw material.
The real profit, however, is to be found in its synthesis. Taking data and applying sophisticated artificial intelligence (in the form of algorithms) to it, which extract meaningful patterns of behaviour and personality, is where the real value is added. Like raw, impure gold that is smelted and eventually turned into an 18k bracelet or pendant, cultivated data represent high-value customer insight (in the form of targeted advertising).
Like Gold, There are Rules and Regulations That Govern its Extraction
Mining data is, at the end of the day, a euphemism for the harvesting of the personal data of internet users. Often, the agreements surrounding privacy and consent, which users are asked to agree to in exchange for access to sites and apps, lack transparency and are sometimes outright misleading.
Just as most gold mining ventures cannot start digging holes wherever it feels like, no questions asked–there are rules and regulations governing mining in most places–there are increasingly rules and oversight dictating how and what data can be mined online. Companies such as Facebook have been hauled in front of Congress and other governing bodies around the world for inadequate transparency surrounding their data collection methods and what gets collected.
Conclusion
The data-as-gold metaphor is apt for a variety of reasons. Both are regarded as precious; both are convertible to currency, or profit; everyone wants a piece of the data-rush; processing it increases its value on the market; and just like natural resource extraction, collecting data involves ethical questions that must be carefully considered. Perhaps most of all, collecting data requires a safe space to store it and protect it from theft and other threats.
This post was last modified on October 21, 2020 7:44 am