Data dividends: Is being paid for your data worth it?

• Author:
• Author name

  Quantumrun Foresight
• August 22, 2022

Insight summary

Data dividend schemes, where companies pay users for their data, raise questions about privacy rights and the actual value of personal information. These programs, like pay-for-privacy, could widen economic disparities and treat low-income individuals unfairly, while also shifting how companies and governments handle personal data. The complexity of assigning value to data and the implications for consumer rights, market dynamics, and data security measures present significant challenges in implementing these schemes effectively.

Data dividends context

Data dividend schemes are a policy where companies pay users for a share of revenue generated from their data. While this arrangement seems like a benefit for individuals, it may have adverse long-term effects. While it would seem that paying users for their data would give a semblance of power back to consumers, it’s still unclear how data dividends would be negotiated, calculated, or paid out.

Additionally, some experts think that data monetization could send a message that data privacy is a commodity instead of a right. Further, countries might be incentivized to exploit their citizen’s data by imposing taxes and fines on information that belongs to individuals in the first place. 

There are three central questions around the feasibility of data dividends. The first is who determines how much users are paid for their privacy. Is it the government, or is it the companies who earn from using data? Secondly, what makes data valuable to companies? There are so many ways that information is monetized that it makes it tricky for users to determine when they should be paid for it and how often.

Additionally, even for big tech companies that generate billions of revenue, the revenue per user is relatively small. For Facebook, the average revenue per user globally is a measly USD $7 quarterly. Finally, what does the average user gain from data dividends, and what do they lose? Certain personal information is very costly for users to divulge (and extremely dangerous when leaked, such as medical data) yet can only command low market prices.

Disruptive impact

Pay-for-privacy is one of the possible by-products of commodifying data. For example, telecom company AT&T offers discounts to customers in exchange for watching more targeted ads. These schemes allow companies to collect user data in exchange for a discount or other benefit. While appealing to some people, some privacy analysts argue that these plans are risky and unjust.

They target those who don’t have the financial means to safeguard their data and privacy. Instead of implementing regulations that protect everyone, these programs treat low-income people (especially in the developing world) almost as second-class citizens.

Proponents of data privacy suggest that instead of paying consumers for their data, they should be taught to have real control over their personal information. Laws for “privacy as a default” should be prioritized, where companies always ask for consent before using information and can only use data to serve customers’ needs. Some policymakers further argue that the nature of data is too complex to put a price to it.

Not only is global data interconnected and spans across industries, but not all companies have the resources to implement a fair data dividends program. For example, the healthcare and financial services industries are more mature and compliant regarding data management and storage, but small and medium enterprises do not have the same capacity or exposure. Unlike quantifiable stock dividends, data is an evolving concept that will probably never be wholly defined, let alone assigned a value.

Implications of data dividends

Wider implications of data dividends may include: 

• Data unions emerging as legal, political, or technological entities to establish data dividends, leading to stronger collective bargaining for consumers' data rights.
• The rise of pay-for-privacy models in various industries, where companies offer incentives for personal information.
• Collaboration between governments and technology companies to devise a data dividends framework, possibly introducing tax implications for participants.
• Civil rights organizations resisting the commodification of personal data, emphasizing the protection of consumer rights against involuntary data sales.
• Enhanced transparency in data handling by companies, prompted by data dividends, fostering increased accountability and consumer trust.
• An increase in personalized marketing strategies as businesses gain access to more nuanced consumer data through data dividends schemes.
• Shifts in the labor market towards data management and privacy roles, responding to the complexities of implementing data dividends systems.
• A noticeable shift in power dynamics, with consumers gaining more control over their data and its economic value in the digital marketplace.
• Potential for new legislative measures to ensure equitable data dividends distribution, addressing concerns of digital divide and data access inequality.
• An escalation in data security measures by companies, driven by the need to protect the now monetarily valued consumer data under data dividends models.

Questions to consider

• Would you be interested in receiving dividends for your data?
• How else do you think data dividends might affect how consumers share their data?