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This Site Pays Cash For Your Data

Mar 3 2014, 8:31am CST | by

This Site Pays Cash For Your Data
 
 

For years, entrepreneurs have floated the idea of paying people for their personal data rather than just taking it without asking, the standard approach of many marketers.

Now, a few entrepreneurs are advancing plans to get cash or benefits into your hands in exchange for letting marketers have direct access to your social network activity, Internet browsing, purchases and other transactions. This information helps marketers pitch the right products to interested customers.

Datacoup calls itself the first personal data marketplace where users get a share of the money generated by selling information about themselves. It allows users to pick which data they want to sell and get paid monthly by credit card.

The problem for such new companies is that marketers will not pay much for details about just thousands of people when data brokers who pay nothing to individuals offer detailed dossiers on millions. At the same time, few users will sign up to share their data for just pennies.

Datacoup founder Matt Hogan, a former bond salesman who lost his job when Lehman Brothers entered bankruptcy during the financial crisis, came up with a solution to this chicken-and-egg problem. He set an arbitrary amount to pay those agreeing to share data: up to $8 a month for those who share the most.

“We came to the conclusion that cash was the only way to truly get this off the ground,” he says.

“We as consumers need to sort of hold them hostage with this information,” he adds, referring to marketing companies. “I don’t mean hold hostage in a bad way, it’s just a data set that is really valuable and we are not using it.”

Datacoup has raised $440,000 in investment so far to fund this initial effort, which is now paying fewer than 1,500 people in a trial period. So far, most people make far less than the $8 figure. The average for February was just $1.56. “Even if I got only $1 for it, it is $1 more than what I am now getting,” says Hogan.

Here’s how the site describes what it does with user data that might come from Facebook feeds or web browsing, for example. “When you start selling your data, we combine it with all the other Datacoup users’ data, take out anything personally identifiable, and then analyze the large pool, looking for patterns across different demographics and other data characteristics.”

The problem with setting a fixed dollar amount for personal information is that, in reality, its value may vary dramatically. Information about someone looking to buy a house or car may be quite valuable to a marketer; someone looking for new kind of hot sauce worth little or nothing.

Elad Leshem, an Israeli entrepreneur planning to create a business that will pay users for their data, estimates a company might be willing to spend $50 for the exclusive information that someone is looking for a mortgage. A Mercedes dealer might pay $500 to be the only one to learn about your desire to buy a new sports car; a cheaper model might only merit a $100 payment, says Leshem, who lives in Berlin. He is hoping to set up a beta site this month.

Because the amounts any one person can receive at present are still tiny, Marcos Menendez in Spain has come up with a different business plan to motivate people. He is proposing a “data cooperative” that gives away half of the income to microcredit projects in the developing world. The other half of money will fund his company thegooddata.org.

It will operate as a Chrome browser plugin and block out a user’s personal information unless companies pay. He will sell the data initially to an online marketing company whose name he did not want published that helps companies with digital advertising.

“You are going to be safer by downloading the extension and, on top of that, you are going to make some good — this money is going to be given to developing markets,” Menendez says. “The only way they are going to put advertising to my users is if they have a deal with me.”

Other companies such as Reputation.com with income from other online businesses are also developing plans to allow people to sell their data, perhaps earning not only cash but rewards points, discounts, status and other offers. Big data brokers such as Acxiom and Experian could also decide to pay some people for data to improve the uneven quality of the information they now hold.

These are still early days for the business of individuals taking over control from data brokers and selling their own data. But it is an idea whose time is arriving.

Source: Forbes

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<a href="/latest_stories/all/all/31" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

 

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