Find Me Fit

The Economics of Life Recording

Google makes its bucks by tracking every aspect of your life online. For the benefit of FREE we allow Google into every intimate aspect of our lives: our communication (Gmail), our interests (Search), where we’re going (Maps), and what we see (YouTube). Tracking our “data stream” (everywhere we go and everything we do) online is big business. By correlating our behavior and interests with other people’s, Google can figure out with a high degree of accuracy what we want and when we want it. It monetizes this information by placing highly relevant advertising in front of us at those times.

Amazon is successful for the same reasons. When I go to Amazon with the intention of buying one book, I usually leave having bought about five. That’s because Amazon has tracked the behavior of every single person that has ever visited the site. They’ve taken every purchase anyone has made and correlated it to your behavior and your purchasing decisions. That’s powerful data.

Apple’s GPS enabled 3G iPhone promises to bring life recording to a whole new level by taking it offline. Location aware cell phone apps will bring the power of the data stream to our everyday lives in much the same way Amazon brings it to retail. Think about your daily activities. You have a routine. You shop at many of the same stores regularly. Almost everything you do has a pattern that you’ve spent your whole life developing. When you overlap that pattern with other people’s lives you’ll discover new products and services that people with similar interests use that you don’t know about. That’s the power of tracking user behavior.

The economic implications are enormous. Besides the obvious dating (“notify me when someone with similar interests is nearby”) and social (“notify me when my friends are nearby”) applications, location based services will fundamentally change the way we interact with the offline world. People will discover new products and services based on automatic recommendations derived from behavior they have in common with other people. The broker of these recommendations will make a lot of money.

But why stop there? We already let Google read our email in exchange for a free account. Why not let a service listen to our phone conversations? Companies like PhoneTag already listen to your voicemail and transcribe that to SMS text for your convenience. It’s not much of a leap to combine that with advertising and make it free or offer free cell phone service that targets advertising based on what you say and where you go. (Maybe this is the strategy behind Grand Central and Android).

Moreover, location based apps will fundamentally change the way we interact with the world and the people in it. It’s like carrying your Facebook profile on your head. I can learn everything about you before you say “hello.” When I’m walking in the mall, I can find out where other people with similar interests shopped. When I drive down the street, I can get offers for stores I drive by. Think of it as Google Adsense for the real world. Instead of contextualizing advertising to the content of the web page you’re on, the advertising becomes contextual to the content of where you are and what you’re doing.

This entry was posted on Thursday, June 12th, 2008 at 3:49 pm and is filed under Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.