Can You Put a Price On Data?

Here's another Dee Hock transcription from The Birth of the Chaordic Age. He does an impeccable job describing the material surrounding so many sleepless nights while we were building Gnip (and while our partners were trying to understand their value propositions as well).

If you're building a company that sells data, or its surrounding services... read on.

In the end, Gnip profited primarily from its services, and the "publishers" of data (e.g. the social networks) ascribed value to the "data" itself (and priced accordingly). We did share in some of that value, but it was a relatively small percentage of our revenue.

Any emphasis is mine.

Old Monkey Mind and I had spent countless hours trying to understand information and its relevance to organizations, asking our endless questions. What is the significance of the “inform” part of the word “information? What is the nature of that which is received from eternal sources and “forms us” within? What is the nature of that which forms within us which we then feel compelled to transmit, and how does it form others when it is received? What allows formation of information, permits it to endure unaltered, yet be available at any time for transformation in infinite ways? Why and from where came the universal, perpetual urge to receive and transmit information - the incessant desire to communicate? Is it an urge at all, or is it an unavoidable necessity - an integral component essential to life? Indeed, is it the essence of life itself? Or is it a principle beyond life itself? Could it be the fundamental, formative essence that gives shape and distinction to all things - part of an inseparably whole universe?

It helps to think what information is not. Certainly it is not just another “thing”; on more finite, physical entity. Certainly, information is far moe than digits and data. They may be components of it - the shape it sometimes takes. They may be of it, but they are not it. In a rare insight, Gregory Bateson proposed that “information is a difference that makes a difference.” If something is received that cannot be differentiated or, if once differentiated, makes no difference, he asserts it is just noise.

Bateson’s perspective is fascinating but limited, for it implies only mind-to-mind communication. If you are hiking alone in the wilderness and a rock comes bounding down the mountain, breaking your leg, that is certainly a difference that makes an enormous difference. The same can be said o running barefoot through the house and breaking a toe on a chair leg. Is that information? Both are certainly a difference that makes a difference. Both certainly convey meaning. If your broken leg and crushed toe are a difference that makes a difference, then, by Bateson’s definition, condensed, inanimate matter and gravitational force clearly have the ability to communicate. Locked in our box of self-awareness, we think of it as one-way communication - rock to leg, or chair leg to toe, but we truly have no way of knowing what information , if any flows the opposite way. Unlike finite physical resources, information multiplies by transfer and is not depleted by use. Information transferred is not lost to the source, yet is a gain to the recipient. Information can be utilized by everyone without loss to anyone. As far as we know, the supply of information is infinite; therefore, it does not obey any of our concepts or laws of scarcity. It obeys only concepts and principles of infinite abundance, infinite utilization, infinite recombination. We have only dim perceptions of what those principles might be, or if they exist at all.

Projecting onto information our old notions of property, thus turning it into a method by which one person can extract wealth from another, neither reveals nor changes the extraordinary nature of information. It reveals only the limited nature of man and his reluctance to change internal modules of reality or external behavior.
Information is a miser of energy. It can endlessly replicate, move ubiquitously at the speed of light, and massively condense in minute space, all at minuscule expense of energy, in other words, cost. In countless ways, it is becoming a replacement for our present enormously wasteful use of matter. To the extent that we increase the value of the mental content of the composition of goods and services, we can reduce the value of the physical content. We can make them lighter, more durable, more recyclable, more versatile, and more transportable.

Information breeds. When one bit of information is combined with another, the result is new information. Information is boundary less. It cannot be contained. No matter what constraints we try to put on information, it will become the slave and property of no one. Efforts to make information conform to archaic notions of scarcity, ownership, and finite physical quantity - concepts that grew out of the agricultural and industrialized age - merely lock humanoid into old, mental boxes of constraint and exploitation.
Information is ethically neutral. Its immense power is as applicable to destructive, inequitable, violent ends as it is to constructive, equitable, peaceful ends. The history of modern sciences has been an effort to divorce the ethical dimensions of life from the physical to divorce subjective values from objective observations; to divorce spirituality from rationality. The effect has been deification of the rational, physical, objective perspective as ultimate truth, and demonization of the subjective, ethical, and spiritual perspective a superstition, delusion, and ignorance.

Products, services, and organizations in which the value of the mental content begins to dwarf the value of the physical content require wise people of deep understanding. To endlessly add to the quantity of mechanistic information, knowledge, and technology without similar evolution of values and wisdom is not only foolish, it is dangerous. To massively develop means and act in accordance with what those means permit without careful consideration of ends in the context of values is equally idiotic.

Thinking about a society based on information and one based on physicality requires radically different perspective and consciousness. However, we prefer too often to ignore the fundamental differences and carry over into the Chaordic Age of managing information, ideas and values, concepts, and assumptions that proved useful in the mechanized, Industrial Age of machine crafting, the age of managing things; concepts such as ownership finite supply, obsolescence, loss by conveyance, containment, scarcity, separability, quantifiable measurement, statistical economics, mathematical monetarism, hierarchal structuralism, and command-and-control management.

The birth of the Chaordic Age calls into question virtually every concepts of societal organization, management, and conduct on which we have come to rely. Clinging too rigorously to old concepts, dismissing new concepts too lightly, protecting old forms that resulting from those concepts too fiercely, imposing those rooms on a changing society too resolutely, are a certain path to failure. As Sir Francis Bacon put it precisely centuries ago, in admonishing those who apposed the mechanistic concepts of Newton and Descartes: “They that reverence too much the old times are but a scorn to the new.”

The new concepts Bacon so ably defended with that assertion are excruciatingly old today. They are concepts that we now reverence too much.