How Amazon (Re)Used AOL’s Data

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According to Kenneth Cukier and Viktor Mayer-Schonberger, authors of the book Big Data: A Revolution That Will Transform How We Live, Work, and Think, “with big data, the value of data is changing.  In the digital age, data shed its role of supporting transactions and often became the good itself that was traded.  In a big data world, things change again.  Data’s value shifts from its primary use to its potential future uses.  This has profound consequences.  It affects how businesses value the data they hold and who they let access it.  It enables, and may force, companies to change their business models.  It alters how organizations think about data and how they use it.”

Getting organizations to think about how they use their data, and about how data is an asset to every organization, has historically been a difficult discussion to even get started.  In fact, most companies viewed their data as only a means to an end, such as completing a financial transaction, and once that end was achieved, the data that got them there no longer had any further meaning.

“Although data has long been valuable,” Cukier and Mayer-Schonberger explained, “it was either seen as ancillary to the core operations of running a business, or limited to relatively narrow categories such as intellectual property or personal information.  In contrast, in the age of big data, all data will be regarded as valuable, in and of itself.”

New platforms for the age of big data are providing “new techniques for collecting and analyzing huge bodies of data that will help us make sense of our world in ways we are just starting to appreciate,” Cukier and Mayer-Schonberger explained.  “The real revolution is not in the machines that calculate data, but in data itself and how we use it.”

Data’s usefulness now extends beyond the purpose for which it was collected.  Data is now truly a raw material of business, especially for businesses capable of viewing data as a raw material that can be put to multiple business uses.  “Data’s full value is much greater than the value extracted from its first use.  Companies that have failed to appreciate the importance of data’s reuse have learned their lesson the hard way.”

“For example,” Cukier and Mayer-Schonberger explained, “in Amazon’s early days it signed a deal with AOL to run the technology behind AOL’s e-commerce site.  To most people, it looked like an ordinary outsourcing deal.  But what really interested Amazon was getting hold of data on what AOL users were looking at and buying, which would improve the performance of its recommendation engine.  Poor AOL never realized this.  It only saw the data’s value in terms of its primary purpose—sales.  Clever Amazon knew it could reap benefits by putting the data to a secondary use.”

Sometimes discussions about big data focus too much on new data from new sources that your organization should acquire.  However, your organization may already possess treasure troves of data that could be reused to create new business opportunities and generate new revenue streams.  So, before you rush to acquire new data, start looking at your old data in a new light.

“Data’s true value,” Cukier and Mayer-Schonberger concluded, “is like an iceberg floating in the ocean.  Only a tiny part of it is visible at first sight, while much of it is hidden beneath the surface.  Innovative companies that understand this can extract that hidden value and reap potentially huge benefits.”

About Jim Harris

Jim Harris is the Blogger-in-Chief at Obsessive-Compulsive Data Quality (OCDQ), which is an independent blog offering a vendor-neutral perspective on data quality and its related disciplines. He is a recognized thought leader with more than 20 years of enterprise data management industry experience. Jim Harris is an independent consultant, professional speaker, and freelance writer for hire.

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