This past week, one of the best TED debates was made available online. Erik Brynjolfsson and Robert Gordon argued on the subject of growth. In my humble opinion, Mr. Brynjolfsson made the most compelling case for many reasons, but primarily, because his case unveils some of the characteristics of what I call the (Big) Data Economy and one in particular: “Data as a currency”
Data = Value
In his speech, Brynjolfsson argues that about $300B in GDP growth have not been captured, because the way we traditionally measure GDP, fails to understand ‘new’ types of value. He uses the example of software and applications – many of which are now available for free. Brynjolfsson’s premise is that, although these assets can be acquired for free (and therefore technically represents 0 value in GDP terms), they provide a tremendous impact to GDP…ultimately.
Good point. Take the simplest of all free applications: Facebook. No consumer gets charged to use Facebook. Yet, every piece of information each user enters in the application represents tremendous value that Facebook uses for advertising purposes.
Simple enough and many have done this before – Google is a notorious example. Every application that you download and use for “free” is never free. The information that you put in the application – explicitly or implicitly – becomes the currency that can be used to create value.
In other terms: no product comes for free. If you get something for free, you’re the product. If you’re the product, your data becomes the currency.