Once Again - Why your data is free but everywhere in chains

We first explained how Free Consumer Web Services would be funded by datamining you data 2 years ago in our paper "FreeConomics II - Why your data is free but everywhere in chains" and readers of his blog will know we have been steadily warning people of privacy erosion over the last 2 years. But we are a small and specialist blog, talking manly to early users of these technologies. We have often wondered on these pages when the abuse of Privacy will "go mainstream" - in fact we thought it would be 2009 after the Beacon fiasco, but we were overoptimistic. Now however, a Wall Street Journal article yesterday laid it all out for the first time for a larger audience - to summarise:

The Journal conducted a comprehensive study that assesses and analyzes the broad array of cookies and other surveillance technology that companies are deploying on Internet users. It reveals that the tracking of consumers has grown both far more pervasive and far more intrusive than is realized by all but a handful of people in the vanguard of the industry.

• The study found that the nation's 50 top websites on average installed 64 pieces of tracking technology onto the computers of visitors, usually with no warning. A dozen sites each installed more than a hundred. The nonprofit Wikipedia installed none.

• Tracking technology is getting smarter and more intrusive. Monitoring used to be limited mainly to "cookie" files that record websites people visit. But the Journal found new tools that scan in real time what people are doing on a Web page, then instantly assess location, income, shopping interests and even medical conditions. Some tools surreptitiously re-spawn themselves even after users try to delete them.

• These profiles of individuals, constantly refreshed, are bought and sold on stock-market-like exchanges that have sprung up in the past 18 months.

The new technologies are transforming the Internet economy. Advertisers once primarily bought ads on specific Web pages—a car ad on a car site. Now, advertisers are paying a premium to follow people around the Internet, wherever they go, with highly specific marketing messages.

In between the Internet user and the advertiser, the Journal identified more than 100 middlemen—tracking companies, data brokers and advertising networks—competing to meet the growing demand for data on individual behavior and interests.

Of course, the defenders of privacy abuse will come leaping to its defence - here is Jeff Jarvis:

I just don’t understand Julia Angwin’s scare story about cookies and ad targeting in the Wall Street Journal. That is, I don’t understand how the Journal could be so breathlessly naive, unsophisticated, and anachronistic about the basics of the modern media business. It is the Reefer Madness of the digital age: Oh my God, Mabel, they’re watching us!

If I were a conspiracy theorist — and I’m not, because I’ve found the world is rarely organized enough to conspire (and I found this to be especially true of News Corp. when I worked there, at TV Guide) — I’d imagine that the Journal ginned up this alleged exposé as a way to attack everyone else’s advertising business just as its parent company skulks behind its pay wall and surrenders its own ad business. But I’m not a conspiracy theorist. That’s why I’m confused.

The rest of the piece carries on in the same ad hominem vein ad nauseam. Great rational argument there, way to go Jeff! (But then this is the man who wrote the original Google Hagiography, so he would say that, wouldn't he ).

Pushing Out Choice to Consumers

The Intenet Advertising Board (IAB) is being a bit more subtle, as Adriana Lukas explains

Here are the important bits - the reservations about HR 5777, the Best
Practices Act proposal:

1. concept of first party data usage - "when consumers go to an online
website they understand there is going to be a certain amount of data
exchange by that first party site to serve them content and services
and yes, advertising. We think that clearly the first party (data)
usage should be exempted out of this. Choice mechanism not notice - we
should always do better around giving consumers notice to about thow
their data is collected and used

2. 3rd party data sharing - the internet is nothing but a series of
3rd party relationships. Virtually every website requires those 3rd
party data sharing whether is to customise content, to run your
analytics on the backside to make sure you know who's coming to your
site to get paid or whether it's for relevant advertising. have an opt
out ??? empowering consumers to exercise their choice when they have
legitimate concerns around privacy. You need to give them good notice,
you need to empower them and you need to educate them...

"I think, it's impossible to take information out of information age.
because if you do that you are going to get less relevant advertising
and less relevant advertising by definition is spam. And I don't think
anybody wants that - it is not good for consumers and not good for
business."

In fact its probably the HR5777 Best Practices bill draft that is starting all this kerfuffle as the lobbyists and apologists gird their loins.

Getting a Cluetrain

A reasoned riposte to all this comes from Doc Searls:

Here’s what’s delusional about all this: There is no demand for tracking by individual customers. All the demand comes from advertisers — or from companies selling to advertisers.

For now.

Here is the difference between an advertiser and an ordinary company just trying to sell stuff to customers: nothing. If a better way to sell stuff comes along — especially if customers like it better than this crap the Journal is reporting on — advertising is in trouble.

Here is the difference between an active customer who wants to buy stuff and a consumer targeted by secretive tracking bullshit: everything.

Two things are going to happen here. One is that we’ll stop putting up with it. The other is that we’ll find better ways for demand and supply to meet — ways that don’t involve tracking or the guesswork called advertising.

I’ve said it before: Improving a pain in the ass doesn’t make it a kiss.

The frontier here is on the demand side, not the supply side. Advertising may pay for lots of great stuff (such as search) that we take for granted, but advertising even at its best is guesswork. It flourishes in the absence of more efficient and direct demand-supply interactions. The idea of making advertising perfectly personal has been a holy grail of the business since Day Alpha. Now that Day Omega is approaching, thanks to creepy shit like this, the advertsing business is going to crash up against a harsh fact: “consumers” are real people, and most real people are creeped out by this stuff. Rough impersonal guesswork is tolerable. Totally personalized guesswork is not.

Searls (one of the Cluetrain Manifesto authors) some time ago started to work on VRM, which could act as an alternative to this sort of "Sales By Privacy Abuse" approach by creating tools for the customer's desies to flow to providers without the need for datamining etc.

Granted a piece in the WSJ is not yet a mass market coverage, but that will now come, when organs such as the WSJ and FT pick things up, the Qualities and then the Mass media sart to echo them. Also, the emergence of HR5777 signals that the legislative wheels are starting to turn, and that too will raise the ante from now on. I would predict that this ball has now started to roll, and the by the end of 2010 we will start to see "Respect for Online Privacy" become a major issue.

About time.........

(Hmmm - article saying much the same as this one is over here - came out after us, I claim firsts )