Copyright 1999 The New York Times Company
The New
York Times
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March 1, 1999, Monday, Late Edition - Final
SECTION: Section C; Page 4; Column
1; Business/Financial Desk
LENGTH: 969 words
HEADLINE: TECHNOLOGY: Digital Commerce;
Personal
information is like gold in the Internet economy, and the rush is on to both
exploit it and protect it.
BYLINE: By Denise
Caruso
BODY:
FOR the last few weeks, the data
privacy battle has been waged with such fury that privacy advocates have not
known whether to cry, cheer or simply assume the fetal position.
Personal privacy -- the disposition of all those pieces
of information that computers hold about each of us -- has been
debated in the electronic world for almost two decades. Although the issues are
complex, the bottom lines have always been pretty clearly drawn. People and
companies that sell personal data want to be able to collect and distribute it
pretty much with abandon, and they fight like cornered weasels at even the
suggestion of government regulation.
Yet, most people on line -- 87
percent in a 1997 Georgia Tech survey -- want "complete control" over their
personal data. And if they feel violated by data collectors, they often scream
bloody murder.
In 1991, for example, the Lotus Corporation was forced to
cancel shipments of Marketplace, a CD-ROM data base, after receiving thousands
of angry E-pistles from people who took grievous offense at the data base's
content: the names, addresses, income levels, numbers of children and other data
for every household in the United States.
More recently, privacy
advocates wrested a hollow victory from the Intel Corporation, after the company
announced that its new Pentium III chips contained embedded electronic serial
numbers for authenticating documents, E-mail and copyrighted material. Watchdogs
warned that the numbers could be used to identify a computer to prying software,
or to allow companies or agencies to track a person's movements across the
Internet.
Intel refused to remove the number, but agreed to provide
software that hides it behind a digital fig leaf, software that some say has
already been compromised.
And the California Legislature, often a
bellwether for technology issues, is considering more than a dozen privacy laws,
including one that would restrict the collection and disclosure of personal
information by government, business or nonprofit organizations. It specifically
includes information gathered via Internet sites.
Still, plenty of
others are rushing to cash in on the data gold rush.
Privacy advocates
were extremely cranky after discovering that Florida, South Carolina and
Colorado were selling residents' driver's license information to a New
Hampshire-based company, Image Data L.L.C.
They were even more outraged
to discover that the Secret Service had financed another private company's
efforts to develop a national data base of driver's license photographs.
And in the most telling testament yet to the commercial value of
personal data in the Internet economy, a start-up called Free PC announced that
it would provide a free Internet connection and a free Compaq computer to anyone
willing to "apply" by answering a detailed questionnaire and then accepting
constant bombardment by advertisers based on the personal profile created from
the questionnaire.
Rich Le Furgy, chairman of the Internet Advertising
Bureau, an industry group, said that advertisers haven't even begun to tap the
Internet's potential. They are now investigating how to aim promotions at
individual consumers based on their on-line behavior: vendors want to co-market
products in much the same way that convenience stores did after discovering, for
example, that people who buy beer also often buy diapers at the same time.
Not exactly music to the ears of a privacy-sensitive consumer.
Obviously, on-line advertising organizations find themselves straddling a very
pointy fence between companies that pay for advertising and customers who are
subjected to that advertising. The constituencies have very different
viewpoints, and finding a solution palatable to both is not a task for the
squeamish.
For example, Mr. Le Furgy said "it would be a beautiful
thing" for consumers to control their personal data -- especially if it meant
avoiding legislation and regulation.
"Privacy is an enabler of
commerce," he said. If consumers can get money for their personal information
and still control it, "they'll be much more willing to provide it."
In
fact, a new breed of Internet company is already making a business of that
concept.
These companies, known as infomediaries -- a term coined by
John Hagel, co-author of "Net Worth: Shaping Markets When Customers Make the
Rules" (Harvard Business School Press, 1999) -- will step in and help consumers
regain control of their personal data.
For a price, of course.
A
recent Wired News feature predicts that an up and coming pack of these
entrepreneurs will "cut the consumer in" on the deal when information about them
is bought and sold. Infomediaries keep a percentage for themselves for providing
the security mechanisms by which consumers can control exactly who buys their
personal data and for what purpose.
But some privacy advocates would
eliminate even the infomediary and pass laws granting consumers not just civil
rights to their privacy, but property rights to their private data, ending the
free-market eminent domain that data marketers have exploited for decades.
Citing a Virginia law that forbids the use of anyone's name or likeness
without permission, Ram Avrahami, a business consultant, unsuccessfully sued
U.S. News & World Report in 1996 for selling his name to another magazine.
At the time, Mr. Avrahami's opponents ridiculed him for suing over 8 cents,
which is what the magazine had paid for his name.
"The point is this:
It's 8 cents for me, for you, for 100 million other Americans, which becomes big
money," said Mr. Avrahami, who has since become a leading advocate of private
data ownership. "Think of it this way: Free PC proves that our personal
information is worth hundreds of dollars. Now, who should get those dollars, if
not us?"
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GRAPHIC:
Drawing (Tom Bloom)
LOAD-DATE: March 1, 1999
