Data: The Essence of a Digital Lifestyle

By Dirk Knemeyer

Published: November 3, 2005

“There are those who look at things the way they are and ask ‘Why?’ I dream of things that never were and ask ‘Why not?’”—Robert F. Kennedy

Imagine: A space for seeing the world in a different way is Dirk Knemeyer’s forum for asking “Why not?” and dreaming about things that never were—but certainly could be. This column will explore innovative and progressive topics in digital product design today and look at where current trends and patterns are taking us tomorrow.

“I've been thinking a lot about metadata recently…. My interest is in the future of content ownership, delivery, and value. I see a future for media that looks very different from the media of today.”

I’ve been thinking a lot about metadata recently, but not from the standpoint of XML or programming or helping to organize and index data. My interest is in the future of content ownership, delivery, and value. I see a future for media that looks very different from the media of today. The germ of this idea actually came from my experiences with online movie rentals.

I’ve been a Netflix® customer for a few years now. Their user experience adds tremendous value beyond traditional brick-and-mortar video rental stores, with home delivery of movies, a no-late-fee policy, and robust management of information about my previous rentals on their Web site, shown in Figure 1—through their ratings and cataloging features—as well as keeping track of my selections for future rentals.

But as much as I like Netflix, a funny thing happened recently: Blockbuster® entered the home-delivery movie rental business, trumpeting lower rates and integration with their brick-and-mortar stores. And I’ve heard rumors that other major corporations like Wal-Mart® and Amazon.com® may join the fray. Almost immediately, Netflix became commodified in my mind. How much cheaper would these other providers be? What kind of packages would they offer? Might their delivery be even quicker? My loyalty to Netflix quickly disintegrated. I took it for granted that their competitors would offer the same movie catalog, delivery speed, and Web application features and user interface. It seemed like I could rent videos based only on price.

Figure 1—Netflix

Netflix

But as I continued to use Netflix while investigating other providers, I suddenly realized that—unless the cost difference was significant, say more than $5 or $10 per month—I would not be leaving Netflix. Why? They have all of my personal movie data.

I have taken the time to rate over 200 movies and provide data for their databases that enables them to make smart recommendations on the basis of my past behavior. I had created a queue of about 100 movies that I had already read about, decided I want to see, and put in my virtual shopping cart. Some of my friends also have Netflix accounts, and their history and data operates in concert with my own, enhancing the quality of my movie selection experience. It would take hours to transfer my movie ratings and the movies in my queue to a new service. And what about the participation of my friends? It would require a strong sales job to get my friends to move to a new video rental service, too. I might, at best, get half of them to switch.

“Netflix has essentially got me. Why? … They’ve got my personal data, my history, my preferences, and my viewing plans for the future. … The value and differentiation is in the ownership of my personal data.”

So, Netflix has essentially got me. Why? Not because they’ve created exclusive content. Not because their service is better or their prices are lower. Not because their Web application provides a killer user experience. They’ve got my personal data, my history, my preferences, and my viewing plans for the future. Netflix is essentially plugged into me, taking what is inside my head and using that information to help me enjoy a more robust movie-viewing experience. The content—the movies themselves—has become commodified. The value and differentiation is in the ownership of my personal data.

But this lesson goes so much further and applies in many different contexts.

Thanks to enormous, inexpensive digital-storage capacities, there is no longer any reason for digital media to exist in a physical form. The notion of people physically possessing software applications, video games, or other digital media on compact discs, videotapes, DVDs, cartridges, or other media will become quaint—if not an indulgence. A single device—perhaps the size of a Mac mini or smaller—could hold all of it. And since broadband connections and even wireless connections to centralized networks are becoming faster and more ubiquitous every day, we don’t need physical media to conveniently deliver software or content to people. There is no need to store digital media locally. It can reside on remote storage devices.

Virtual digital media represents a fundamental shift in people’s conceptual model of possessions. We are accustomed to our possessions existing in some tangible way. Now, all we need is a user interface and the right to use or access software or content—a license or user account—not to possess them on physical media. However, from the standpoint of usability, there may still be a preference for certain types of media to continue to exist in a physical form, particularly written content like books or periodicals.

Let’s examine the juxtaposition between the businesses and applications we participate in conceptualizing, designing and creating and the soon-to-be-realized ubiquitous computing infrastructure with its almost limitless amounts of inexpensive digital storage space.

“The killer digital applications of the future will gather, use, and leverage people’s data to satisfy needs that they don’t even realize they have.”

Future value points lie in extending and enhancing the behavior, preferences, and minds of people. It’s no longer enough to provide content or an application that enables people to complete specific and predetermined tasks—such as purchasing items or managing their checking accounts. The killer digital applications of the future will gather, use, and leverage people’s data to satisfy needs that they don’t even realize they have and fulfill desires that are beyond either their conscious understanding or their personal knowledge and ability to conceive of.

The Amazon.com model is a good early—if ultimately clumsy—example of this concept in practice. They assiduously collect data and incentivize us to share our preferences, so they can provide recommendations that expand our purchasing behaviors and more deeply integrate Amazon.com into our lives, as shown in Figure 2. But beyond those top-level, business-driven functions that their data collection, processing, and model of use provide, there are some benefits for people.

Figure 2—Amazon

Amazon

Amazon.com keeps a record of our entire purchasing histories, enabling us to go back in time to see what we have purchased. This can help us to find answers to questions that, in the past, we haven’t even thought to ask. Because there was no record of our behavior, we had no expectation that there could be answers to such questions. Did I already buy my father a book on bird watching or was that for my uncle? What was the name of that video game I bought for my friend’s son, which might be a perfect gift for my niece? What specifically have I been spending my disposable income on and in what proportions? Imagining, for a moment, that Amazon.com had been my primary purchasing vehicle since I was, say, five years old, I could start to really explore some interesting questions that relate to my personal identity. I could begin to understand my own development—at least as seen through the products that I’ve purchased or, stretching a bit beyond the boundaries of the data that Amazon now accumulates, people have purchased for me.

“The very constitution of our products and user experiences is changing. Data will increasingly be where the value is.”

The fatal flaw is that Amazon now owns my data. And Netflix owns a different set of my data. So does Google™. So do my financial institution and countless other companies. Our data is dispersed, existing only in shards that we do not own. The companies that own our data use it for their own business gain and make it available to us only as it serves their corporate needs. If I asked them to provide the data to me in a format that would work in a database that I owned, they probably would not even respond to my email message or would do so only with some outrageously generic stock response that didn’t even deal with the issue. So, my data, which remains splintered and owned by corporate interests, does not serve my own personal needs for its use, preventing me from leveraging what could, in an aggregated form, represent an incredibly powerful data record that would provide an interesting tapestry of my life.

The very constitution of our products and user experiences is changing. Data will increasingly be where the value is. The physical world is becoming digital. How we do things will change, and the power of ubiquitous computing will revolutionize many of our behaviors that we today largely take for granted. Realizing and understanding that this shift is about to occur will enable all of us to anticipate the future and productively participate in creating it.

8 Comments

Dirk, thanks for the nice examples and alternate view of what Tim O’Reilly calls the “Architecture of Participation,” where the system is set up to promote and leverage the participation of its users. This is an archetypal example of Web 2.0.

As you point out, this architecture not only provides current value by doing things like giving you movie recommendations, but also improves the value of those recommendations over time, as more and more people use the system.

By the way, Walmart actually had its own DVD rental service, but eventually abandoned it in favor of a partnership with Netflix, who would provide the DVD rentals but send DVD purchasers to Walmart.com. One of the factors behind this move, undoubtedly, was the Netflix userbase, the switching costs as you mention, and the great user experience that resulted from so many participants.

Also, you said “data is where the value is”. This is true from the standpoint of those who make web sites, but not from those who use them. I would add to what you said by claiming that it is not just data but the intelligent aggregation, remixing, and novel interfaces built upon that data which allow designers to create truly useful tools for people, and thus amazing user experiences.

Hi Josh,

Thanks for the good comments. I actually wrote this article about six months ago; sorry for the outdated WalMart content! Your last paragraph is particularly insightful, and makes my point better than I did! :-)

dk

Dirk, may I suggest you take a look at Brett Lider’s brillant presentation from IA summit 2005, where he adressed the issues of data ownership under the proposed umbrella of C2B (Consumer to Business).

Why Amazon is not Enough: Towards the future of eCommerce and the Web (ppt 4,3mb)

Thanks for the pointer, Are: that is a really good and prescient presentation. I wonder why more people aren’t talking about these sort of things, as the idea is obviously less original than I thought it was!

Hi Dirk, There is another way of looking at this scenario. First, let me say that the way you wrote this out is great. And that Brett’s presentation was brillant almost a year ago as well. The very nature of commerce is going to be changing in the near future, as more and more companies are realizing that their data isn’t the valuable part, but rather their interfaces to that data is what they are selling, and then the next thing is the enablement to combine that data to what other organizations data. Right? isn’t this the whole “mashing” thing?

Then there is the next level. I’d like to reference 2 related sites: Attention Trust: http://attentiontrust.org/ Root Vault: http://root.net/vault

the idea behind both sites is about a concept called “attention”. Attention’s core concept is that being built every second of every day is your digital finger print. In the data of every click, search, typed address, phone number, sms, im, e-mail, phone call, DVR/TiVo recording, channel change, commercial skip is YOU, and well shouldn’t you own that data and manage how it gets used (that’s the attention trust part). Root Vaults is then the how you can begin to conceive to imagine how you might deal w/ all that data, and then furhter convert it into information.

This new “attention” ownership will actually break Netflix’s grasp on you, and you can take all that data and maybe another service can take your NetFlix, Amazon, Google, Fandango, etc. etc. and find ways of combining and mining, and re-visulizing that data.

Then you’ll get something totally different, eh?

Then NetFlix is just one fish in a pond and it will be their service and experience that is going to have to hold you, and not the data, b/c you own the data, or at least the combination of that data across systems.

— dave

I have written my own thoughts on the same, though my vision of the future online is through APIs and not through emails!

My post on the future online

Your discussion seems to be the old, proprietary versus standards issue. How do they keep your data—xml, metadata?

If one vendor and another can get together and play nice with your metadata, what is their competitive advantage? You have quite nicely pointed out one of their key market advantages that bind you—the customer—to them and their services and applications. Now what interest would Netflix have in losing that bond?

It’s not likely they will hand over the keys to their customer loyalty to all comers—not tomorrow anyway.

You should manage your personal data from the beginning. They come second, so what you need is some kind of wrapper application or plugin that keeps track of what you are doing out there—a tag-watcher application.

Maybe, like… evernote or something. Save your clips, manage your own metadata. You could know what movies you rented and do it better than them. Also, you keep your note info in the cloud, so you can access it from anywhere and share its tags with whomever else’s applications you wanted that used a similarly compliant plugin architecture.

I’ll just suggest this: do it in a standards compliant manner and a universal data format, so you don’t end up becoming what you hate, and I guess then you’re good to go. Just sayin’…

I also wanted to draw your attention to Jason Udell’s column “ Who’s Got the Tag?”

A similar concept really, but instead of picture file metadata, it’s your metadata.

So, who’s got yourmetadata? Meta-data-corp! We know you better than you do. Oh, sorry—that’s already Google, isn’t it? :)

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