Can You Create A Market For Privacy? Would Anyone Care If You Did?

from the artificial-scarcity-isn't-a-business-model dept

David writes in to point us to Jim Manzi’s guest post at Andrew Sullivan’s Daily Dish suggesting that a way to deal with privacy issues is to create a market for private info. This is not a new idea, though it’s not clear if Manzi knows about those who have tried it before. Root Markets has been trying to do this for years without getting that much traction. Manzi’s idea is that right now people are lax with transaction data because they really have no choice: “When the choices are (1) opt out of modern life, or (2) implicitly surrender all of this info, pretty much everybody picks door #2.” His description of the solution, however, should immediately ring some bells on an analogy that shows why his plan will almost certainly never work:

“But what if I had the practical ability to charge commercial entities for access to or use of information of this sort? It would, first, go from a free good to a scarcer resource, and second, I could protect those parts of my transaction history that I feel to be most sensitive. In effect, we need a functioning market into which I can sell my transaction history.”

Yes, he’s basically saying that we should take an infinite resource (data about our transactions) and forcibly create artificial scarcity, and then create a market around that artificial scarcity. It sounds nice in theory, but given how just about every market that’s based on artificial scarcity is disintegrating as we speak, it seems unlikely to get very far. If there’s one lesson that we’ve learned from watching the entertainment industry implode over the last decade, it should be that artificial scarcity doesn’t last. Basing a business model on artificial scarcity is incredibly risky.

Given how little attention Root Markets has received from users, Manzi may not be correct in estimating where consumers’ feelings lie on this matter. As they’ve shown time and time again, it’s not that people want to keep their transaction data private and just don’t have the means to do so — it’s that very few really seem to care at all.

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Comments on “Can You Create A Market For Privacy? Would Anyone Care If You Did?”

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SomeGuy says:

Re: Re: Re: Re:

Depending on what assets you control, your personal data could be worth a lot! And just IMAGINE what sort of trumped-up awards we could claim for “potential” damages. I mean, identity theft alone, nevermind “lost sales” of your data, could be a significant weight.

I love this idea! I may never have to work again!

Chuck Norris' Enemy (deceased) says:

It will all come around

If we start charging marketing companies to use our personal info, then they will charge Wal-Mart more for the info who, in turn, will charge us more for our products. An artificial market of this sort make other people rich and increases your cost, just so you think they haven’t given out your transaction history.

Danny says:

Between convenient loopholes that lawyers will find for the companies they represent, inevitable exemptions for whoever pays off the right politicians and what comment #5 said this plan is doomed to fail.

And KaBoom diamonds aren’t totally artificially scarce. Yes there hoarders that like to keep a tight grip on the diamond market but there is actually only a limited number of diamonds in the world.

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