Monetizing the personal cloud could involve a coffee shop

Could you host your data in a personal cloud and make money off it, too? A San Francisco-based company called The Respect Network is building the foundation to do just that, by letting you permit businesses to access certain personal information.

For example, at a coffee shop, as you pay for a latte, you’d use your smartphone to scan the QR code on a sticker by the cash register and sign up for custom offers in exchange for your email address.

The Respect Network plans to start operating its platform in the first quarter of next year, said Drummond Reed, the company’s managing director.

“Everyone wins,” Reed said. “You get this incredible service, (the coffee shop) gets this deeper, trusted relationship, and away we go.”

Respect Network Managing Director Drummond Reed

When I heard about the Respect Network at the Personal Data Ecosystem Consortium‘s San Francisco meetup last week, the personal-privacy angle intrigued me. Instead of being pulled into data sharing by signing up for, say, Facebook, the Respect Network wants individual users to have control and give the OK for each data grab. That’s neat.

But as I talked with Reed, the company’s business model sounded just as original. It resembles that of credit card networks such as Visa and MasterCard. They receive processing fees for moving money from buyers to sellers and eventually pass on rebates to consumers. Similarly, the coffee shop and other Respect Network business clients will pay an annual fee for access.

The Respect Network starts off as a peer-to-peer network on which people can share documents on the fly that can be updated in real time, sort of like Google Drive. Each user’s documents will stay on a personal cloud, whether he or she operates it or someone else does. The idea is to host user data free of charge, just as Google Drive has always been free for consumers. But instead of agreeing to a large company’s terms of service and privacy policy, the personal-cloud network will run on the Respect Trust Framework, which mandates that a user’s personal information and data cannot be shared without his or her permission.

The business model will work on top of the peer-to-peer network. I will be able to go to a Respect Network-enabled business — a coffee shop, a grocery store or some other consumer-facing business — and agree to let it send me the custom offers and see certain personal data. The business pays the Respect Network, which pays some money to the company maintaining my personal cloud, which in turn can give me a rebate for posting data in the first place.

“It fundamentally boils down to the merchant paying for the value of having these very convenient electronic payment options for you, the customer,” Reed told me later.

It turns out banks are interested in getting involved with the Respect Network, possibly as providers of the personal cloud, Reed said. They see commonalities between credit-card networks and the Respect Network.

To be sure, other companies have been looking to monetize the personal cloud, but methods vary. Instead of paying a publisher for access to exclusive content, consumers can opt to let Enliken send publishers data about their internet searches and other information. An application called Xenapto lets entrepreneurs host business documents and transfer them to potential investors, and it can also facilitate investments. Personal, which stores users passwords and credit-card information to accelerate the sign-up process, is planning a premium service for consumers and businesses alike. Meanwhile, my colleague Derrick Harris has argued that Facebook could pay users for sharing their data, to respond to the notion that it profits off user data.

Despite the complexity of the Respect Network’s business model, it could make for a whole new business opportunity for cloud infrastructure providers. If banks or other companies decide to host Respect Network users’ personal clouds, they won’t be able to do it without hardware.