Chum attracts sharks, we all know that. Trouble is, in the data monetization business model, that’s just what data is.

As we discussed last time, the emerging data monetization business model sees ecosystems developing around stores of data. Participants in each ecosystem share data and each plays a role in helping to meet the customer needs identified by analyzing that data: insurers will be part of these ecosystems.

What I now want to argue is that even as insurers are coming to terms with the blue business model, data monetization, they should have more than half an eye cocked for the next big thing. I believe that this coming storm can be discerned by examining the hidden dynamics of data monetization more closely.

As data emerges as the new “currency” or store of value in business, a whole category of data brokers has emerged. Largely unregulated, these companies collect the information we ourselves post via tweets, Facebook and the like, as well the growing amounts of “observed data,” such as keystrokes and credit-card transactions.

Many companies are giving third parties the right (presumably in return for cash) to monitor their sites and to collect information about visitors. And other sites that appear to be “free” dating sites or forums for discussion are actually just ways to collect information. Similarly, many “free” apps, it is said, actually make money by tracking user information and selling it to other companies. Watch this CBS program for more information, and names.

Remember, if it’s free, then you (or data about you) are the product. Or, to rephrase a venerable cliché: If the lunch is free, you might be on the menu.

These vast databases are up for sale to the highest bidder and, as I showed in an earlier blog, they can be extremely revealing; for example, individuals in America with a particular disease or condition, including alcoholism, depression, and psychiatric and genetic problems. And, by correlating other data points, like clubs being frequented and purchases made, brokers can offer purchasers lists that reveal disturbingly detailed personal information.

All this information is linked to individuals, something that is worrying more and more people and regulators.

Next time, I’ll continue this discussion by explaining why data value is leading to questions about data ownership, and thus setting the stage for a second wave of disruption.

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