The California Digital Dividend Plan: Can Data Monetization Revenue Sharing Work?

The point about fines that Bastable makes is particularly salient, and it will be interesting to watch how American data monetization law develops along this line. The GDPR provides for very large fines, but fines of a substantial size are only just beginning to roll out. The most noteworthy thus far has been the €50 million fine Google was hit with in France, but even that is a drop in the bucket next to the company’s annual total revenue of about $136 billion USD. Enough financial pain caused to a company can indirectly translate into better outcomes for data subjects, but there is no direct remuneration for those who suffer some sort of loss or damage due to improperly handled data.

The downsides of data dividends?

Jonathan Deveaux, head of enterprise data protection at German server security company comforte AG, provides an alternate take on the potential impact of a digital dividend implementation:

“It’s refreshing to hear the new California governor comment on the responsibility of data protection. Understanding his suggestion that companies have a duty to protect personal data is a positive message, especially in times where the number of data records lost to data breaches, and exposures are at an all-time high.

Sharing in “the wealth that is created” by personal data is a bold concept and may have some not so good consequences.  Some studies show users are spending more and more time on their devices than in previous years.  You can catch a subway train, or walk down busy streets – people are staring at their mobile devices. What will be in the impact of this should people now have access to the “digital dividend” based on their personal data? Texting while driving is already a huge concern – will this risk increase as well?

If there’s a way to share in the revenue stream created for our own data, that’s great. But we also need to be aware of the unintended consequences of doing so, and how they may impact society today.”

It’s difficult to assess the potential negative impacts of this nature with no firm terms yet announced from Governor Newsom’s office, but it is certainly a point worth exploring. If digital dividend shares increase with the amount of personal data provided or use of the service, it is possible that perverse data monetization incentives could develop. If data subjects are directly paid for sharing their data, they may also end up sharing even more sensitive data more freely due to the financial incentive.

No matter what happens, American companies will probably soon find themselves having to make major updates to their data security practices due to new regulations to protect personal data. The law may also need to provide for some manner by which to educate low-information data subjects who are not aware of the scope of use of their personal data or the risks they are subject to by supplying it.

Digital dividends and the future of data monetization

It will be interesting to see what shape the Newsom proposal ultimately takes. Sen. Mark Warner of Virginia predicted in November that the state would make such a move, guessing that any data dividend for Californians would equal about 25% of the estimated worth of an individual’s data set.

It’s unclear if Warner had any conversations with Newsom about this data monetization proposal, or how exactly an individual’s data stores would be valued in relation to company revenue streams. An Axios report simply divided annual company revenue by number of active monthly users to come up with some very small numbers – $7.37 USD for each Facebook user, $2.83 for Twitter users and a mere 30 cents for each Redditor. Of course, this methodology is flawed for a number of reasons. Some users are certainly more valuable to these companies than others in terms of data quality and quantity, and this method fails to adjust for accounts that are anonymous or contain no personal information of value whatsoever.

One possible model that could be used as a precedent for this scheme is the Alaska Permanent Fund, which consists of a state-owned corporation set up to collect a percentage of state oil revenue and then redistribute it annually to long-term state residents who have registered for the fund. Alaska makes about $1 to $6 billion in oil revenue each year, and Permanent Fund members receive checks that range from about $1,000 to $2,000 once per year. In one of the simplest possible scenarios, companies selling data might be directed to contribute some fixed percentage of their overall revenue to a similar fund.

 


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jcornwell
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jcornwell

We should all own our own data. 100%. What we do with is up to the individual. I should be allowed to directly sell my data to Google (or whoever) and negotiate a price for that data. This plan that Newsom is proposing is essentially a tax on the companies. It will turn into a never-ending pit of a slush fund if it is like anything else being run in California at Government hands… My data, my money.

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