Our view about data co-ops

Recently, the Co-operative party published an interesting article about data co-ops. The article mention the very few initiatives worldwide including TheGoodData.

We have been invited to share our views about data ownership, the role of co-ops to exercise that right, and some initiatives that we believe that could facilitate the creation and growth of more and stronger data-co-ops.

We share our views hereafter:

Not only our data is becoming more and more valuable, not only it can be key to address new societal challenges, but it is already impacting our daily life. Proliferation of artificial intelligence and big data technologies are already biasing the choices we have when interacting with corporations or even with the Public Administration. Ownership of our data will not only make us capture part of a new factor of production that emanates from us, but will reinforce our freedom as consumers and citizens.

However, building a data co-op that helps us exercise those rights is enormously challenging. We have suffered it when building TheGoodData. Comparing to a traditional co-op there are at least two extra challenges economically speaking:

  1. Data requires huge volume. There cannot be data co-ops of 10, 100 or 1000 people. Data co-ops need to gather data from hundreds of thousands of people to become a relevant player in front of researchers, data brokers, advertisers, etc. This challenge can be attenuated by targeting a market niche, for instance a geographical one hand in hand with a city council.
  2. Volume requires building appealing services that “harvest” and process data. Either around privacy, visualisation, research or monetisation. This represents a huge upfront investment in technology development that can only see a payback after a long period in which users are attracted little by little. Many private companies surmount that barrier with the support of venture capitalists that can provide them with enough cash flow to cover that effort. Co-ops cannot normally access to that high-risk form of funding.

There are several levers that can mitigate these 2 barriers. We mention here a few of them:

  1. Collaboration among co-ops. There are some very sizeable “data pools” that are being managed by co-ops: The Co-operative Group, John Lewis Partnership, The Midcounties Co-operative, The Phone Co-op, etc. These co-ops have millions of data points that could serve as a starting point to build a very robust data co-op. It only requires willingness from participants. This collaboration could eventually be extended to genuine “sharing economy” companies that would be willing to open their users’ data to a neutral hub, owned by the people.
  2. Support from the Administration. It is the easiest help to request, and the toughest to get, but nevertheless Public Administration can provide an enormous support with limited effort. For instance, providing access to public data at a country or municipality level, legally binding corporations to facilitate data portability in a seamless standardised way, or providing public grants and tools that foster the creation of a data ecosystem.
  3. Development of legal structures in which co-ops facilitate the participation of venture capital funds. Co-ops can already hold different types of shareholders with different rights. It may be that venture capitalists could already fit into these parameters, but it would require to set up a concrete framework in collaboration with a venture capital. A showcase where the VC can envision that its target pay-back could be achievable, and its minimum shareholding rights could be guaranteed.
  4. Embracing collaboration between data holders and data traders. In a similar way to the oil industry, landowners may hold the oil property but could lack the means to extract it. In that case of data, data co-ops may focus on holding the “property rights” of their users’ data, but looking for partners that extracts, process and trades that data. In that case, the investment required would fall under the partner duties in exchange of a revenue share. These partners could be other co-ops, private companies or even new forms of platform cooperatives like DAOs (Decentralised Autonomous Organisations). For those interested in that theoretical approach, We have written a short paper that can be read here

There may be many other levers that could propel the creation and growth of data co-ops, and we would appreciate any comment/amendment to this writing. But if none of them is activated, data co-ops may become a utopia of the past. By the time when people decide to practice as data owners it may be too late to change the whole system of corporate and public surveillance where data is in hands of third parties that guarantee the prevailing economic model.