[UPDATED]
The Wall Street Journal is publishing a series exposing the data collection practices by ad networks and search engines and is providing helpful, but little publicized information about links to "opt out".
Although most of the controversy is about faceless commercial entities creating accurate intimate profiles of an individual, there is another equally important concern . . . when so-called sophisticated analysis is nothing more than a Wild A** Guess and is dead wrong.
Take my 79 year old mother, for example, who is an avid Google user, but probably defies all assumptions made by the "artificial intelligence" with which Eric Schmidt of Google anticipates "we can predict where you are going to go."
Mother is an early adopter of every technology. And she has used the internet to access information and educate herself about every medical condition, treatment, drug, etc. which my Father and she have encountered.
The so-called "artificial intelligence" concludes she is a guy interested in enlarging her penis, access to porn, and well, do I need to go on? She actually dreads checking her i-phone when an email comes in and has had a few embarrassing moments when her grandchildren are playing games on her phone and an email alert peaks their curiosity.
The idea that a 3rd party can profile you accurately based on your behavior on the web and commercialize that information may seem creepy and a violation of your personal privacy. But it is even worse if they assume they are right and get it completely wrong.
Individuals would benefit by having the tools to securely store personal information, publish content, and critically, control the context in which information is released. For example, my Mother would have the tools to signal the specific medical context of her interests and her receptivity to vendor information, so penis enlargement vendors would not make such an inappropriate Wild A** Guess and she would get the information she truly wants.
Both Paul Graham, YCombinator head, and Doc Searls, author of the Cluetrain Manifesto, point out that traditional advertising is not sustainable on the internet. Paul Graham points out that one reason Yahoo! failed to develop a viable business model was because their focus was distracted to the bubble of demand for internet banner advertising (before advertisers realized it is less effective than traditional print).
"Hard as it is to believe now, the big money then was in banner ads. Advertisers were willing to pay ridiculous amounts for banner ads. So Yahoo's sales force had evolved to exploit this source of revenue."
Likewize Doc Searls predicted the web ad business bubble would burst. As he points out, his prediction is now echoed by others like Eric Clemons, Professor of Operations and Information Management at Wharton, whom he quotes:
"The net will find monetization models and these will be different from the advertising models used by mass media, just as the models used by mass media were different from the monetization models of theater and sporting events before them. Indeed, there has to be some way to create websites that do other than provide free access to content. . ."
Many believe that the net monetization model will be an evolution of the free/ad supported model used by mass media. However, this assumption overlooks three basic facts. First, mass media adopted the free/ad supported model because there was no other choice - there was no way to collect money directly from consumers for broadcast media when it was only available "over the air - and now that cable collects more money from consumers than the networks generate in ad revenues, the networks and cable are now re-negotiating for a share of those monthly cable fees. Second, mass media advertising is no longer seen as a growth strategy, it is a share defender, resulting in a long term shift of advertising's share of marketing budget from pure mass advertising to other categories since the late 1980's. Third, the premium paid for live event participation is growing exponentially.
In the spirit of aiming for something to disrupt ambiguity - by not splitting hairs over what is a better form of advertising or taking sides in the retransmission fee negotiations and by aiming for something that makes all those discussions moot - Comradity is firmly in the camp of believing that innovation should be about creating something worth paying for. And in our actual experience marketing access to content (i.e., this is not a Wild A** Guess), when people are paying, the payer must have total control over their personal information, and when people are participating, they must have control over the content they are creating. In our opinion, all the investment in surreptitious data collection and analysis space will be absolutely irrelevant to a paid model (unless it can be retrofitted efficiently to give control to the individual).
But "the challenge" to attracting investment, as Venture Capitalist, Fred Wilson is quoted by Stephen Baker here is to prove the business can "get someone [whether business or consumer] to pay $2-$10 dollars per month to ensure that sort of premium privacy."
In our opinion, this discussion, although important, is putting the cart before the horse. That's why "consumer" response to privacy issues seems so ambiguous. It seems as though they don't care. But that's because so far people have a way to protect their privacy. They either do not share information or they remove it from services like Facebook when they shift their privacy policies to more open. In other words, there is not enough value created by free services like Facebook to care.
To motivate anyone to pay for innovation, first there needs to be a reason to use it. Therefore, as important as it is for technology to aim to innovate in the area of premium privacy, the value won't be there unless there is something to lose by NOT sharing information or participating. First we need to develop experiences worth paying for and charge enough to share the revenue with the technologies which make it possible to participate and give individuals control over their information shared and content created.
