Sunday, January 6, 2008

QOTD: Umair Haque on the cost of exclusion

Sorry, I keep going back to Umair Haque, but quite honestly I don't know of anyone who is a better thinker on what's happening right now. This is related a tad to my posts of the last few days: Data is a Commodity, or How Not to Revolutionize...

The way we're discussing media is still focused on exclusion - "it's their service, they own you." That's inaccurate. In fact, what's strategically critical aren't the costs of exclusion, but the costs of inclusion.

And a bonus quote:

Let me try and put it more simple. Data is inherently valueless in the edgeconomy, because it's infinitely replicable. Any structure seeking to limit access to data will simply be too radically inefficient for the market to bear in the medium-long run.

UPDATE: Scott Karp says he doesn't totally agree with Umair's thinking: Data And The Future Of The Web

Umair is half right — we are increasingly overrun by data, and SOME of it is a commodity. The commodity data is precisely what Google has harnessed, which makes Google so powerful — the data on the open web.

And then for the life of me, I'm hard pressed to figure how he doesn't make Umair's exact point:

The future of the web will be determined by companies that can overcome people challenges — to bring EVERYONE’S data online, and make it useful. And it won’t be about locking up people’s data, but instead helping them be smart about the free flow of their data.

It will be about networking that data, connecting it, to make a whole greater than the sum of the parts. That’s why web applications are so much more powerful than siloed desktop applications. That’s why the web itself is so powerful — it’s not just about collecting and distributing data. It’s about connecting data. And about connecting people.

And that is where I got confused, as I'm hard pressed to see any difference in that and what Umair said:

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.


Anonymous said...

What's being left out in this discussion is that there are different kinds of data, some more easily monetized than others. There's also a question about how you monetize.

At the end of the day, current events archives become free of charge but ad supported. See recent developments with the New York Times and soon The Wall Street Journal as notable examples. Those current events archives are free of charge because they are essentially common knowledge. Why not be openly linkable as the free source of common knowledge? Ads with the proper scale of distribution can support this.

The trick for charging directly for data I think is uncommon knowledge. There's a few places that exists: (1) Hard to collect data with high value added, e.g., maps; (2) Directly actionable real time data such as stock price feeds.

At the end of the day though, you have to have some way to monetize that supports your costs. The point I see in the "new" (edge?) economy is that the way you monetize and the scale you have to operate at in order to do so effectively have all changed. Rather dramatically in some cases.

Simon E said...

A useful distinction might be found by reflecting on who owns "attention data" or "interest-data" (the things we watch & search)... Google harvests all this and makes billions of dollars doing so, does that make it OK?

When Umair says: "Data is inherently valueless in the edgeconomy, because it's infinitely replicable." He is generalizing, like the economist he is. But, its more than a little disingenuous... The data that Google captures has enormous value, that is beyond dispute.

So, to understand the puzzle, one has to look at the look at the web from an engineer's point of view, not an economists. Google co-opts that data because of the way the web's and Google's architecture actually functions.

You quote Umair as saying: "Any structure seeking to limit access to data will simply be too radically inefficient for the market to bear in the medium-long run. (This may give a clue to long term outcomes)

Again... who's data is it?