29/12/2014

DATA economics: risks of pricing to ZERO

Commodities were targets of wars, of many kinds including colonial ones. This was infortunate. Today the economics of commodities is structured into commodity trading and their associated market places.
This was the physical world, and still is...

NOW comes the digital world, and the ubiquitous digital part of any economic activity in any sector...
The new commodity is DATA, or more precisely SOURCE DATA.

Recognise with me that an easy but complete model of the DIGITAL ECONOMY builds on three pillars: software, networks, and data.

https://www.xing.com/communities/posts/digital-economy-how-does-it-work-1009091263

Software is valued, so are Networks, but what about the raw data, the source of sources?
Take the case of consumers using a widely spread digital environment: they want their maps and guidance, their calendars, and written or visual communication anywhere anytime. To get this basic requirement of today's life (digital, partly digital at least) they give away their data, which are a precious input for others to make lots of money with it.
Unrefined oil is not as precious as refined oil from the gas/petrol station, but is oil free? And oil comes from the ground, not from people themselves. So why should DATA be free to those making money with it?

Remember this horrible global economic activity headquartered in Bristol, UK? Free manpower exported to the New World. Shame on mankind to have allowed for it.

Free is and should always be suspect unless it's transparently auditable, as in CBPP (commons based peer production as wikipedia). Otherwise "make it free for me" is at the source of this untransparent integrated economy which ruled Sicily, the birth place of my grandfather, for too long.

In technical terms, set a Lagrange multiplier (price can be seen as one) to zero, and the constraint which could also have revealed opportunities in economic terms, disappears.
Here is a scheme showing how the "give me your data for free" scheme works in the Digital Economy.



https://www.xing.com/communities/groups/big-data-economics-c6b9-1073836

NOW, here is a first intent to see how to price more systematically data, and progress to wards data market places as the physical economy did when it created commodity trading, and their associated market places.
This book has been published last month. It builds on use cases and data categories which have a price and economic schemes, to suggest new ways to address data pricing, using, ecosystems, etc.

http://www.amazon.com/Data-Economics-Towards-Market-Places-ebook/dp/B00QD7LMO2


XING: starting a big data economics group