Dapp to control/monetize your data

"From data abuse to personal data control and direct compensation" – implementing and developing on top of the Cardano blockchain a smart contract system that give people back control over their personal information and compensates them for the use of their data and for their attention.

Cardano adoption and impact - We are currently launching the Profila App with 5 SME consumer brands in 3 regions in Q1 2021 (Benelux - Switzerland - Orlando/California), and are expecting +/- 1000-2000 users per month to join (via B2B2C model, as invited by brands). 25.000 expected in 2021; 78.200 expected in 2022. More info under the detailed plan, section 5.

1. The market explained - the current privacy problem en digital marketing business model

Today's online advertising model - A big part of the time we spend online (social media and websites), we are being subjected to online advertising. The advertising market touches billion of consumers and poses great privacy concerns today.

Online advertising is a lucrative business model, valued at USD 304 billion in 2019 and is expected to reach USD 982.82 billion by 2025. This model is entirely based on collecting as much personal data about you and increasing your screen-time. Every second and click (literally) counts. What is being bought and sold by brands, ad agencies and social media companies is your attention, at a cost-per-view (CPM, per 1000 views) or cost-per-click (CPC) rate (namely each time you click an ad). For example; Facebook's average CPC is USD 1.72 worldwide; and each user clicks on avg. on 12 ads per month. In USA/Canada, Facebook's has an avg. revenue per user around USD 200/year.

Online advertising's privacy problem - In order to present you with the best add at the right time, social media or ad companies need to sell your attention to the highest bidding brand. They therefore collect a large amount of personal data about you, in order to present third parties with the best possible picture of who you are and what you like. Some of this data is collected directly from you, whereas other information is collected via cookies or other third parties. Most people are not aware of how much data is shared with how many people, and how they use it.

In principle, each time your personal data is collected or used by a brand, you are shown a privacy policy or cookie policy you are forced to accept. Thereby, you agree to share your personal data, without knowing how recipients will use it. These legal documents make it almost impossible to understand.

But what can you do if Brands uses your data against your expectations, and how do you keep track of all these legal terms that governs brands' use of your personal data? You made an online Wholefoods-account to order groceries but you now get 15 newsletters/week, and your social media feed is full of adds from companies like Trader Joe's, to who you never shared your personal data. You have no idea what you agreed to in a privacy policy with Wholefoods, and you do not know why similar companies are contacting you for products you bought from Wholefoods.

Today, you have no control over the use of your personal data. In order to control your data, you need to know what happens to it, and you need to be able to take action against those who misuse it. People need to understand how their digital interactions with companies work; what commercial terms apply to their interactions; what personal data they ask in exchange, how these companies use (and sell) personal data etc. Consumers demand more control over their personal data and are willing to take action to gain back ownership of their digital lives, but the resources to put that in motion are lacking.

2. Profila today - the existing consumer App – first step towards data control and compensation

"We must work together with web companies to strike a balance that puts a fair level of data control back in the hands of people, including the development of new technology … and exploring alternative revenue models like subscriptions and micropayments" (Tim Berners-Lee, developer of the worldwide web @ CERN).

The current Profila App has both characteristics to help people control their data and accept compensation:

(i) "data control" – giving people control over their data through privacy education and data rights management:

1. Education – basic modules about your privacy rights (information about e.g. your "right to be forgotten" or your "right to access to your personal data"). Consumer privacy rights or "data subject rights" are included in many privacy laws around the world (including GDPR in Europe, CCPA in California, LGDP in Brazil). They are tools that can be used by consumers to control their data.
2. Rights Management – dashboard to manage your rights, e.g. use your 'right to object' to tell Wholefoods to stop sending daily emails, or your "right to be forgotten" to ask Wholefoods to erase all personal data they hold about you.

(ii) "Subscriptions and Micro-Payments". Profila's subscription contract functionality allows for people to receive a compensation from companies (or "brands") that subscribe to people's data.

Brands can send a "subscription offer", in which they detail which of your personal information in your Profila App (one source of truth with your contact details, communication-, product preferences) they ask access to, and in which they propose to you some key contractual terms in relation to your interaction; a.o. (1) the specific data they require, (2) the duration you grant access; (3) the purpose for which a company uses it; and (4) the compensation you receive in exchange. Our process makes sure the brand explains the contract terms in understandable language, so the consumer knows what he/she agrees to. Our revenue model is 50/50, meaning that every USD that a Brand pays for showing you an add, we share 50/50 with consumers.
If you agree to these terms, you essentially click "accept" and both parties conclude a data subscription contract. Payment is made by the brand at intervals throughout the contract terms (usually monthly), on the conditions that the consumers' personal data is kept up to data, and the brand can also access additional data about the consumer's preferences for certain products and services relevant for the brand.

E.g. Wholefoods pays Alice 12 USD/year (1 USD each month) to access her (i) personal data (email, phone) (ii) preferences about food (vegetarian, bio-products, lactose intolerant) and (iii) communication preferences (Alice would like to receive discounts/product info via WhatsApp). This helps to serve her better. If Wholefoods listens to Maria, she will be a happy consumer. Alice gets good products and services and receives a compensation for the use of her personal data by Wholefoods. Each advertising she watches, Alice gets paid. If Alice wants to know in the future what she agreed to, she can easily verify the terms of her relationship with Wholefoods in her Profila App (under the Wholefoods data subscription).

3. Profila tomorrow – the Catalyst project - implementing data subscription contracts on the Cardano blockchain in the form of a smart contract, and using ADA for micropayments

What do we seek to improve via this Challenge?

Issue 1 - "centralized contract management" - Each data subscription contract (including the specific terms) that is concluded between an individual Profila user and a Brand today, is only saved by Profila in our IT environment, and can only be enforced by Profila, who is contractually a party to this contract as an intermediary. Profila as a commercial entity is therefore guaranteeing that the contract exists, what terms it contains, whether terms are abided by (e.g. payments made). Profila needs to monitor if money is paid by the Brand, and if personal data and other commercial data by the individuals is filled in/updated. This is a liability for both contracting parties, who would need to trust Profila.

Issue 2 - "low-value; high volume payments" - The data license fee and any other fees for attention to be paid to users are currently setup using Stripe, which is not entirely ideal for sending very low-amount, high-volume instant payments worldwide. What is Mitsubishi, as a Japanese brand, needs to pay a US consumer on Profila for seeing an add? We would have to bill Mitsubishi 0.40 USD for displaying the add, and transfer our US customer 0,20 USD. This takes time, administration, and will include large payment processing fees (compared to the amount transferred). Considering the amount of customers of the Profila App (25.000 expected in 2021; 78.200 expected in 2022), this payout model doesn't scale. We have setup monthly payouts to consumers (in bulk, for several activities with several brands combined) to reduce costs of transferring money, but we would want to be able to instantly pay a consumer.

Under the Catalyst project (fund 4), we want to tackle these 2 issues by including smart contracts (which executes themselves and don't require Profila as intermediary monitoring entity) and paying the compensation out via ADA.
First, we will include the relevant elements of this contract in an immutable (Cardano) smart contract, so everyone has an audit trail of every interaction with a brand that concerned the use of its personal data. You will be able to check forever, every authorization or consent you gave to each company for the use of your (personal) data. Nobody would be able to tamper with this information. If a company misuses your data, you can make them accountable by referring to the contract. You can even use the information in the blockchain to file a complaint at a national data protection authority, showing them what you agreed to, and how the company actually (mis)used your data. This is control.

Second, we want to integrate cryptocurrency payments in to the smart contract using ADA, so that people can receive instant and automated micropayments for their personal data and attention if the terms of the smart contract remain fulfilled. Our vision is that by the time the online advertising market reaches USD 982.82 billion by 2025, every USD of that budget that gets spend via Profila, goes to our users in the form of cryptocurrencies.

What other challenges are ahead in our "Zero-knowledge advertising & insights" development roadmap? This smart-contract project is only the first step into our broader Cardano technology adoption and integration around zero-knowledge advertising and insights. Under the next funds, we want to submit additional project proposals for important features we want to develop as part of this effort:

- step 1 - personal data license smart contract - this is the present submission.

- step 2 - privacy ledger - This will include a ledger for all privacy interactions via the privacy rights management platform: each user that exercises a data subject right with a brand will be able to easily access each such request, including the brands' response. E.g. the right to object to the processing of direct marketing messages to Wholefoods, after receiving 15 mails per week with advertising. If in the future, the brand doesn't abide by this request and uses your personal data in breach of this request, you can use the ledger entry to file a complaint with the data privacy authority, or to hold the brand directly accountable.

- step 3 - zero-knowledge proofs - personalized ads with respect of privacy - using zero-knowledge proofs in order to allow a brand to advertise to the "perfect" consumer (meaning to the exact target audience consumer, which exactly matches the specific offering/message a brand wants to share), without sharing ANY personal data with the brand. This in se means that a brand is doing highly relevant and personalized advertising, and a very high cost of conversion (and low cost of engagement), without the privacy risks that the current surveillance marketing model has (=namely, the model requires large amounts of personal data in order to personalize advertising). We will be able to tell when a consumer wants to see an add from which brand, without having to tell the brand who this consumer actually is. Only when the consumer converts (and actually buys a product or service) on the brand's own system, will the brand have access to his/her personal data.

- Step 4 - digital ID - Atala implementation - All digital ID data can be securely stored and encrypted on a user's device, using Cardano 's decentralized public key infrastructure. Each individual can allow organisations access thereto as permissioned by the user; With this integration, we can better guarantee that the correct person is sharing information, and is receiving payments.

4. Practical aspects – "show us the money" – costs

Creating a first proof of concept (POC) of a data subscription on the Cardano blockchain, will require at least a budget of 23.200 USD for a 3-month development project, to be allocated as follows:

20 days of senior blockchain developer @ 800 EUR per day – totaling 16.000 USD
15 days of web/backend developer @ 240 EUR per day – totaling +/- 3.600 USD
15 days of app developer @ 240 EUR per hour – totaling +/- 3.600 USD
We are currently already preparing for the development of this solution – which we are trying to pre-finance – because we believe this is a very important functionality in the control of your data. We expect the solution to be ready by Q2 2021, so that we can test it with the companies that are now using the Profila app with their consumers.

5. Practical aspects – "getting on the road" – GTM; geographical focus; target customer

At the time of the submission of our application to Catalyst Fund 4, the development of our Profila App is finalized and we are onboarding/setting up 5 small and medium enterprises (SME) to trial with their existing consumers. This section explains more about our GTM, ideal location, target customers etc.

(1) Go-to-Market – our Go-to-Market is B2B2C, namely working with brands to invite their existing consumers onto the Profila App, as a new communication channel that is privacy compliant and consumer centric. We have signed up SMEs in 3 regions (see below).
(2) Geographical focus market? We are currently launching the Profila App with 5 SME Brands in 3 regions in Q1 2021 (Benelux - Switzerland - Orlando/California).
(3) Ideal consumer segment? – privacy-aware and digitally savvy "Millennials" (adults between the ages of 22 and 39 years old).
Following a research collaboration we conducted with the University of St. Gallen University of Zurich (Switzerland) to define our go-to-market strategy, we concluded that Millennials are the target consumer audience. Millennials carry out most of their transactions online and are aware of their digital footprint. They are also aware that they have rights to their personal data, but do not yet have an easy tool to control it.
(4) Ideal SME segment? – SME companies in these 3 regions that respect consumer privacy and want a better relationship with their consumers.

6. Intellectual Property information (freedom to operate; IP registrations; contracts)

As an intellectual property lawyer, I made sure that all Profila's intellectual property (IP)-assets are documented/protected:

First, we have conducted a thorough freedom to operate study and patent landscape analysis with the Swiss Innovation Agency, to make sure we are free to develop and commercialize our current technology without infringing on third-party rights.

Second, we have filed for the necessary trademarks that protect our logos and trade names in commerce.
In addition, we have a solid contractual framework in place with all of our suppliers, employees, contractors and customers. All parties involved in our day-to-day activities are doing so under a contract, which include the necessary IP transfer-, confidentiality- and non-compete obligations that protect (and collect) our company's intellectual assets. As part of that, every contracted developer has assigned all IP rights to the Profila App to us, which we will also require from developers working on this project.

Finally, we are looking into open-sourcing the majority of the technology (code) developed under this project, and will assess on an ongoing basis which components would be of interest to the community.

7. Defining success

The POC we are developing (and hope to get funded for) under this first Catalyst (fund 4) submission will add important functionalities to our consumer App – which is being tested on the market during the next 6 months. The POC will also advance our mission and vision to provide people with control of their data and compensation for their attention. Success of the POC would be that we can integrate it into our existing App with one of the 5 SME brands that are testing, and make sure it works with their consumers, and their consumers can get paid via an integrated or linked ADA wallet.

Overview of the work-packages which technical requirements and sprints to be included shortly.