Latest posts by S.T. Karnick (see all)
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- Netflix More Valuable Than Cable and Broadcast Among Millennials, Study Finds - January 10, 2015
Two articles today show how the Internet economy tends to be like the overall economy but much, much faster. Innovation is faster, the rise of new companies is faster, and maturing and death of those firms is likewise faster than in the industrial and service sectors that preceded it and remain in place beside it.
Almost a third of smartphone users do not download any apps for their devices in a typical month, according to a report by Deloitte that predicts the volume of app store sales is hitting a ceiling.
The average number of apps downloaded on a monthly basis has decreased considerably in 2014, the firm found in a survey of people in the UK. As smartphones saturate mobile markets in the US and Europe, developers must rely on customers continuing to download new apps for their businesses to grow.
A variety of problems—including concentration of sales among a few companies and the difficulty of marketing apps in an overcrowded market—indicate that the smartphone app sector has matured and is heading down:
The number of smartphone users who do not download any apps has reached 31 per cent, a steep increase from less than fifth in a similar survey last year. For those that have, the mean number of apps downloaded has fallen to just 1.82, from 2.32 last year.
“Each additional new smartphone [owner] has less inclination to download apps, either out of apathy or, at a more global level, affordability,” Mr Lee said.
Identifying an example of a Web phenomenon that is currently on a rapid rise and hastening the pace of change in the web sector, Gene Marks notes in Forbes that a new web-based “sharing economy” is already having a huge effect and is poised to grow much bigger and have a significantly greater effect on our lives, for both good and ill:
[T]his sharing economy is going to change the world. It’s not cars or tasks or rooms or groceries. It’s data. Today’s cloud based software companies are building enormous troves of data. And the smarter ones are doing this because they see the future. And their future is sharing.
Your location is being tracked. Your purchase history is being stored. Your user profile has been collected. You are prompted to save your passwords. You are asked to confirm your personal details. You must submit an email address. You are required to provide your mother’s maiden name. Every hour more bits of data about you are being gathered, stored, categorized, and archived.
For the forward thinking software service, it’s not just about user licenses. It’s not just about selling boxes or books or tablets or shoes. It’s not merely a mobile app that lets you just buy concert tickets, listen to music or take a note. It’s about the data that’s being collected. It’s why Facebook purchased What’sApp or why Amazon recently announced it was going into the mobile payments business to compete with the likes of Square and PayPal. The current fees from these services are not what’s important. In the long term, the data is what’s important.
Noting that we are currently in only “the very early days of the data sharing economy,” Marks tells readers they shouldn’t worry about this accumulation of information about them:
We are entering a world where the trillions of terabytes of data collected by software companies will soon be put to beneficial use. This world will make them a lot of money. And in return, the world will be a better place for you and me.
Companies will use this information, Marks says, to make life easier for you, and the fact that they will make money from the process should not bother us, he argues. There is some merit to that. After all, that’s what businesses do: give you things you want in exchange for things they want (usually money); it’s a mutually beneficial process. As an example of how it works, Marks quotes David Barrett, CEO of Expensify (a mobile expense reporting service):
“When you forward a travel itinerary to us, we identify it as such and build a travel profile with flight status updates and other features. With this we know not just your past preferences, but your future plans.” . . .
“Imagine you add in another player to this scenario: the OpenTable API (Application Programming Interface ).” Barrett continued. “With this we could say ‘hey there, it’s dinnertime and you’re in a town you don’t know. There’s a great Thai food restaurant next to your hotel and Bob, another one of our users who traveled to this town, ranked this Thai restaurant 5 stars saying ‘So hot I cried!’ Do you want me to make a reservation?’ Or perhaps withGrubHub, we just order your favorite dish and have it waiting for you at the hotel. Or add in the Uber API: ‘I see you just landed, would you like a ride to the hotel? Or maybe a detour to this great Thai restaurant first?’”
“Then imagine you added a simple star-rating and review system onto the expense when you submit it. Now we have a business-travel focused Yelp, except “authenticated” via the credit card purchase (e.g. no reviewing someplace you didn’t go) and “weighted” by how much you spent there (someone who spends $100 should be more trusted than someone who spent $10).”
Later in the article, Marks quotes Barrett extending the example further:
“Want to get really crazy? How about: ‘Hey, this is a bit weird, but there’s another business traveler nearby in town for a bit who loves Thai food as much as you do, and I see from her calendar that she’s free; would you like to meet up at Bob’s favorite Thai place for some curry? If this isn’t your thing, let me know and I’ll never mention it again.’”
As that somewhat tongue-in-cheek but ultimately serious and plausible example shows, the personal-data-sharing economy is beginning to hit its economic prime years, as the technology could indeed be powerfully useful to consumers. We’ve gotten used to amazon.com and other online retailers making recommendations based on our past buying and browsing habits, and there is nothing different in kind about the advanced sort of data-sharing Marks and Barrett describe.
There is a big difference, however, between this kind of economy and conventional economic transactions. In the latter, the exchange is a straightforward trade of goods and services for money, which is merely a means of purchasing the former. In a personal-data-sharing economy, the exchange is, on the surface, strictly of information: the consumer lets the business collect his data, and the business then sells that data to other businesses or uses it itself to generate more business from that consumer and others. The consumer then gets information—about restaurants, transportation options, and even potential companions—in return for letting their data be mined.
The exchange, however, seems to give a much greater amount of power to the business than to the consumer, as is evident in the example of the dating recommendation cited above. When strangers are able to make dating recommendations without even being asked, they clearly have a good deal more power than the individual consumer in such a transaction. Such power could, as Marks notes, do much good. I am far from convinced, however, that most independent-minded people would prefer to live in such a world.
It appears, of course, that we probably won’t have much choice in the matter. Nonetheless, the example of the smartphone apps, noted above, may provide some hope for those who prefer privacy over convenience. In addition, widespread problems tend to bring forth commercial available solutions, which seems likely to happen in regard to the personal-data-sharing economy. To paraphrase Mark Twain, the reports of the death of privacy may have been greatly exaggerated.