Why Data Is Not the New Oil and Data Marketplaces Have Failed Us
<p>The phrase “<em>data is the new oil</em>” was <a href="https://en.wikipedia.org/wiki/Clive_Humby" rel="noopener ugc nofollow" target="_blank">coined by Clive Humby in 2006</a> and has been widely parroted since. However, the analogy holds merit in only a few aspects (e.g. the value of both usually increases with refinement) and data’s broader economic impact has been muted outside of a select few tech and finance companies. But the actual differences between oil and data are fundamental.</p>
<p>Most notably, oil is a commodity. Its quality is standardized and measurable, which makes oil from different sources substitutes (in economic terms it is a “homogenous good”). It is ubiquitous and has a well established price. Not least, if you have a barrel of oil, you can’t simply make a copy to produce another — oil is a limited resource that has to be pulled from the ground.</p>
<p>Data, on the other hand, is a heterogeneous good. It comes in unlimited variety and the value of each occurrence cannot be measured objectively. When two parties exchange a good, the seller has to set a price and the buyer has to establish their willingness to pay. This is complicated by two attributes of data:</p>
<p><strong>The marginal cost of selling the same data to another buyer is zero</strong>. The cost of producing data is highly variable (sequencing a genome is more costly than taking your temperature), but once it exists, that <a href="https://www.investopedia.com/terms/s/sunkcost.asp" rel="noopener ugc nofollow" target="_blank">cost is sunk</a>. The process of selling it to another buyer is the simple act of copying it which, for all practical purposes, is zero.</p>
<p><a href="https://towardsdatascience.com/why-data-is-not-the-new-oil-and-data-marketplaces-have-failed-us-b42dd87a0ba0">Click Here</a></p>