Page 32 - ITU Journal - ICT Discoveries - Volume 1, No. 2, December 2018 - Second special issue on Data for Good

ITU JOURNAL: ICT Discoveries, Vol. 1(2), December 2018

swiftly to the top of the Fortune 500 list and whose its accumulation and use can provide exponential
source of revenue and business models are financial rewards for an enterprise [15]. As a result,
dependent on the gathering and use of personal in the digital age what has often arisen are data-
data. driven business models (DDBMs).

2.2 Business models The collection, control and analysis of large
amounts of user data can provide firms working in
A business model reflects how a firm attracts and the digital markets with a competitive advantage
provides value to consumers and converts this into [16]. Not only can the user data help personalize
a financial profit [3]. A successful business model and increase the quality of services provided but
can differentiate a firm from its competitors, also, more importantly, allows for more targeted
provide huge financial returns and can ultimately advertising. Providing targeted advertising
create a paradigm shift in how an industry functions opportunities is often the major source of revenue
and conducts business. An early example is the for many digital companies and is the alternative
development by engineers of a shipping container (and often more lucrative) format of creating value
which was a result of Malcolm McLean’s (who beyond traditional direct payment mechanisms.
owned a trucking company) ambition to make the Consequently, as the user data provides such large
loading and unloading of ships with cargo more streams of services, many digital platforms are
efficient. Sport sponsorship is another example and offered for ‘free’ attracting a large consumer base
allows for not only brand exposure and recognition and subsequently, further increasing the amount
but also the subsequent sales of products and and value of the collected data. There is a variety of
merchandise for supporters. The rise of budget formats of DDBMs but the majority of the big
airlines such as Southwest Airlines and, more players in the digital markets can fall under three
recently, EasyJet provide a further example. Air general categories. These are search engines,
travel was made less luxurious when tickets could e-commerce and social networks [16]. In this paper
be booked directly online, where processes are we focus on social networks, of which Facebook is
standardized and made more efficient allowing for the most dominant player and which relies on
cheaper air travel [3]. network effects i.e. “The more members a social
network has, the more attractive it is for the
2.3 Digital business models individual member” [16, p.7]. This is further
exacerbated by a lack of interoperability among
With an increase in digitization and the emergence social platforms where consumers are incentivized
of the digital economy, the variety as well as the to join the largest network. As a result, a lock-in
complexity of different business models has only occurs as consumers cannot transfer their personal
increased. As a result, academic literature analyzing data to another provider. This can lead not only, to
digital business models has flourished (see for competitive issues, but also to the accumulation of
example [4], [5], [6], [7], [8], [9], [10], [11], [12], even more personal information (or risk being
[13]). The seminal business model research and removed).
canvas done by Osterwalder et al. [14] has had a
profound impact in the start-up world. The canvas 2.4 GDPR
consists of nine components: key partners, key
activities, key resources, cost structure, value The GDPR is an EU regulation that came into force
proposition, customer relationships, channels, on the 25 of May 2018 and replaced the former
th
customer segments and revenue streams. Indeed, 95/46/EC Data Protection Directive. It is the most
the digital economy and the exponential comprehensive piece of data protection legislation
possibilities it provides not only allows for a to date and unlike its predecessor, is a regulation
multitude of business models in meeting new and thus harmonizes data protection law
customer desires but also in creating value for both throughout the EU member states.
consumers as well as firms. Most significantly, is the
development of alternative forms of gaining profits In the GDPR it is stated that:
beyond the traditional direct payment methods.
This is best represented by the opportunities This regulation is intended to contribute...to
provided by big data. Big data refers to high-volume, economic and social progress, to the strengthening
high-velocity and a large variety of information, and and the convergence of the economies within the

10 © International Telecommunication Union, 2018