The only way corporations are going to overcome online privacy issues is to share more, not less, of their customer data. Guess who with? Their customers. <b>Will Kreth</b> explains.
"TELL ME WHY, WHY, WHY did you recommend the new Jennifer Lopez CD to me, Amazon, when you know I'm more of a Latin Playboys kind of guy?" This is the question I asked myself the other day when mucking about with Amazon's recent addition of the "Why?" link on their Web site; which takes you to a page that might -- or might not -- tell you exactly why they thought J. Lo would be my particular cup of tea. It is all part of Amazon's recently expanded Recommendations service, which -- if you have the patience and the faith that somehow your time spent there will be worthwhile -- is all about collecting and displaying metadata.
Technically defined as data about data, metadata in this case is really information about a noun -- a person, place, thing, product, or service. For instance, if you buy a pair of pants, the metadata about that pair of pants could include the color, the size, the designer, the country it was made in, the type of fabric it was made of, the washing instructions, and so on. From online banking and stock trading to electronic filing of tax returns, early adopters of new technologies now have electronic access to (and control of) their personal financial data and metadata in ways that were unimaginable a generation ago. Today, with home banking programs like Quicken and Microsoft Money -- or with Web-based financial account aggregation and bill-paying services like Yodlee and PayMyBills.com -- we can see not just what we bought (the data), but also the "meta": the price; where we bought it and when; what tax classification the purchase falls under; and what percentage of our budget that purchase (and others like it) make up of our monthly and yearly totals.
Of course, for every noncash purchase that we make, a record or history of the transaction is created. Beyond the simple accounting of a check register or a paper receipt, today online you can see the way your bank or financial institution accounted for your purchase. And not just at the end of the month; but within days -- sometimes hours -- after the transaction.
Online banking and electronic tax preparation/filing are "rubber meets the road" applications that force individuals to pay attention to the details of their spending habits and purchase history. On my account history page, Amazon, the paragon of e-tail personalization, gives me a way to look at every purchase I've ever made from them. Busily crunching their collaborative-filtering numbers on the server-side, Amazon uses my purchase history, clickstream, and my own ratings and modifications of that data to decide what to recommend to me.
The long-term problem with this model: Unlike the relationship I have with my online banking provider, I cannot easily download this information and repurpose it to my advantage. In effect, it is not a shared purchase history. I cannot easily or readily map this information against other competing vendors of Amazon to conduct comparison shopping. I cannot currently download this information onto a personal smart card for use in a real-world retail environment (but that day may be fast approaching). For Amazon (and other e-tailers), this is a bedrock part of their business model -- increasing both customer loyalty and the cost of switching to another vendor by building a massive, proprietary, and "one way" customer database of opt-in preferences, wish lists, clickstreams, and purchase histories. But the days where companies can benefit from all of these goals -- and not allow the customer an increased level of control of this data and metadata -- are numbered.
A new approach is needed -- one that is entirely contrary to the tacit corporate management assumption that consumers don't want a level playing field regarding the monitoring of their online behavior (that is: they don't know enough, don't care, can't be bothered). That new approach is based on sharing and disclosure.
FLOATED BY A RAFT of infomercials and print ads, the Digital Convergence Cue Cat barcode scanner arrived last year in the mailboxes of subscribers to magazines such as Wired and Forbes, and was given away for free at Radio Shacks across the country. Wired publisher Drew Schutte enclosed a letter with the magazine, explaining that selected articles and advertisements in upcoming issues would be accompanied by special Cue Cat barcodes that, when scanned by a PC-connected Cue Cat, would instantly take the user to a related or corresponding Web page. Beyond the value proposition of not having to type in the URL, there was zero effort to discuss why anyone would actually want to use this thing.
As fate would have it, it didn't take long for our Slashdot-reading friends in the Linux/Open Source software community to hack the Cue Cat and start writing software to take advantage of this once proprietary little feline scanning device. Concurrently, these deconstructionists discovered that the chip in the Cue Cat had a unique ID number, one that could potentially be tracked and mapped against profiles of consumer behavior and direct marketing databases. Spinning madly on damage control to protect their investment in distributing millions of these kitties, Digital Convergence claimed that it was never their intention to use this ID to track users, but privacy advocates weren't buying it.
Forging ahead in the wake of controversy, Digital Convergence is attempting to overcome the clunkiness of the wired-to-the-PC Cue Cat with a newly released wireless Cross Pen version. And other manufacturers, including scanner giant Symbol, are working with cell-phone makers like Motorola to put bar-code scanners in cell phones, as well as lowering the price point of their co-branded Palm devices that already include their scanners.
ALL OF THESE DEVELOPMENTS are ultimately inseparable from some rather serious questions. What is the goal of all this? Why are marketers either unable or deathly afraid to explain it, suspecting that they must mask the purpose with old-school giveaways and sweepstakes? And why would customers want to spend all that time scanning in information about their purchase, reading, and viewing habits -- all that "identity rich" metadata about themselves -- when they know that:
1. A database about all these things is obviously being compiled on them, with no access afforded or granted to them to correct potential errors, nor to download and store a local copy of this data for their own purposes or applications?
2. No immediate or tangible reciprocal, "value-for-value" proposition is offered, inferred, or implied for all the volunteered time for and potential privacy intrusion(s) of these "gatherers" of consumer behavior?
In short, as they say in Hollywood: "What's my motivation?"
A COMPANY THAT CONTINUES to cling to a business model that refuses to offer its customers the data collected on them is vulnerable to the process of disintermediation -- that is, it risks being cut out of part of the direct relationship it currently enjoys with customers. Only it won't just be the hackers who find a work-around to these business models; full-blown companies will spring up to take advantage of the situation (examples could include price-comparison shopping bots like MySimon and DealTime, as well as such "lamprey"-like music taste and preference gleaners as Uplister, Kick and Friskit). While most customers might not be able to make hide nor hair of logfiles and SQL databases, there is, at the very least, a modicum of metadata about their preferences and choices that can and should be shared with them in an encrypted, sync-able, download/uploadable format (á la fusionOne) to do with as they please.
It's a given that some customers (and privacy advocates) will never embrace the idea of explicitly sharing this much information about their identity with marketers, and that's their rightful prerogative. However, you could also make the argument that we already live in a world where nontrivial amounts of personal information are already being (and will continue to be) gathered and manipulated by direct marketers, credit bureaus, retailers, and government agencies -- so with the Internet as the enabler, why not allow individuals to tap into this information about themselves for their own personal gain? This kind of reciprocity between corporation and customer could go a long way towards engendering a foundation of trust that we currently lack.
On the horizon, we also know that context-aware, portable smart cards are coming. Whether they are distributed and controlled by the major credit card companies or other firms, we currently have a chance to lobby for and create a climate of customer-empowered profile disclosure and privacy settings. There could be XML DTDs written to create a smart "Customer Passport" -- smarter than any e-wallet, much more reflective of the identity of the customer, and much more valuable for customers to leverage their interests -- both online and off.
For instance, if we could download all of our current customer metadata from Amazon into a standardized file format compatible not only with other retail vendors, but with online travel sites (Expedia, Travelocity, Biztravel), city guides (Citysearch, Vindigo, Digital Cities), music sites (Launchcast, Live365, Spinner), and, eventually, cable/interactive TV/set-top box/personal video recorder (PVR) companies (TiVo, UltimateTV, WebTV, AOL TV), we could also start to see not just a few proprietary recommendations for Harry Potter books, Meet the Parents DVDs, Makita cordless drills, and yes, even the latest J. Lo CD, but a veritable plethora of personalized recommendations, e-commerce opportunities, and real-world experiences being presented to customers. (Like the music of Brazilian chanteuse Bebel Gilberto? How about thirty percent off dinner for two at a new Brazilian restaurant in your city?)
The potential financial gain for interoperability of customer metadata between all these kinds of companies is staggering (dwarfing the current instant-message compatibility fracas between AOL Time Warner and Yahoo/Microsoft/etcetera by an order of magnitude), but it will only happen in an effective and lasting way if the customer has a role in the process as the owner of their own metadata. The "Customer Passport" of the future has to reside with the customer, on their hard drive, smart card, or portable device.
IF ANY ONE COMPANY wants to control it all -- to be the single point of contact between the customer and the things the customer wants to hear, see, do, view, or buy -- the system collapses. A standard way of exchanging customer metadata can and probably will outlast the lifespan of any such company, anyway. When Amazon's PlanetAll.com site folded last year, thousands of customers lost not only the collective metadata on their alumni associations, but wasted untold hours setting up pages to reconnect with old friends and colleagues. The survival of Jeff Bezos's current concern is not written in stone, either (or, at least, not yet).
With an independent, vendor-neutral, and privacy-aware customer metadata standard, we could avoid such losses. And ultimately, if Amazon behaves themselves, I might just let them see my customer metadata I've been acquiring out on other sites on the Web; out in public on my Palm, 3G cell phone, or smart card; or while watching interactive TV. Make me an offer, Jeff. The ultimate question: What's it worth to you?
When the adoption and application of smart cards are viewed in this light, the question shifts from simply asking, "How much basic financial data and loyalty-rewards program points can we put on a smart card?" to "How much identity-rich personal metadata, with the right safeguards and encryption, would be useful on a smart card?" Of course, time will tell how well the whole concept of smart-card ownership and usage will "scrub" with customers, but we do know that the marketing challenges are enormous, especially considering how poorly things similar to smart cards have been marketed in the past. Read the fine print in Visa.com's Smart Card section of their Web site. It should inspire a feeling that there is a "value-for-value" proposition being offered, but, the truth is, you come away from it wondering what the catch is.
IT'S TIME FOR COMPANIES to open the books to their customers and show them a new level of respect. Disclosure can move us closer to closure on some of the most basic issues surrounding online privacy, but the fundamental question remains: Will customers have a seat at the table regarding the control, access, leverage, and sharing of their personal purchase histories and identity-rich metadata?
Today, numerous companies are built around business plans with biz-school catchphrases like creating "high barriers to entry" for competitors and holding customers captive with "high switching costs" -- by aggregating proprietary customer data. When the very language of the customer relationship is adversarial, is it any wonder that the slice of the pie never gets substantially larger?
In a peer-to-peer world, companies that don't (at the very least) share a salient and valuable subset of the metadata they collect on and from customers could be in trouble. If customers could have access to this information and are allowed -- nay, encouraged -- to use it to their best advantage, it could increase the size of the pie for everyone at the table, and quite possibly ameliorate many of the current concerns regarding online privacy.
Will Kreth co-founded HotWired and Wired. He is an Internet consultant, strategist and writer.
Other articles by Will Kreth
Back to Article