The True Price of Privacy: What Users Are Willing to Exchange for (Free) Content

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Trouble with a capital P
If young adults are comfortable sharing parts of their private lives online, then what’s all the hoopla about? For one, they’re not the only ones interacting online. Also, as Chester explains, “Young people don’t realize that the sensitive information they post is now being sold to the highest, or any, bidder.” My cousin, then, in trying to protect herself by limiting access to her Facebook page and shopping only on reputable sites, is still sharing a great deal of information with mysterious third parties. The worry about all this sharing is twofold—who has access to this information, and what is this information used for?

However, if you don’t have a Facebook or MySpace page or a blog, and if you don’t shop online, should you be worried? According to the Center for Digital Democracy, the Electronic Privacy Information Center (EPIC), the European Union, and the U.S. government, the answer would seem to be “yes.” Part of the danger is the lack of awareness on the part of the general public. As Chester says, “The public isn’t informed at all, by the companies, nor the government, about the sophisticated system in place for digital media that collects, analyzes, and then uses our consumer data.”

Let’s face it. We should all be well aware that we’re living in a world where our private lives (online and off) are scrutinized by others. Closed circuit television tracks our comings and goings (and after watching three seasons of the BBC series Spooks, I don’t know how we’d live safely without it). Grocery store fidelity cards record our favorite brand of toilet paper and pickles, and in return we get better-targeted coupons. Any halfway savvy web surfer should know that the same is true online. You’re asked to fill in registration questionnaires for a reason. Amazon kindly offers us suggestions based on our past orders. But who among us really takes the time to read privacy policies? We see the camera as we enter the subway, or the bank, or the elevator, and the reason for its presence is more or less clearly understood. The same is not true online. More often than not, we don’t even know when and what information is being gathered.

Free Content, Strings Attached
The growing worry over companies collecting private information is only part of the story. We may or may not like the fact that bits of our personal lives are residing in databases scattered across cyberspace. What begs the question is why this information is so coveted? The answer, my friends, is money.

Ever since the business world discovered that the internet could be used as another platform to hawk their wares, there’s been a scramble to come up with workable web-based business models. Now that almost anyone offering a service—from your babysitter to the BBC—is compelled to have a web presence, the business model dilemma has become more complicated. If people don’t directly pay to watch television, look up words in the dictionary, or enter a store, why should they have to pay to access online content? For companies such as Google, Facebook, or MySpace, whose business is the internet, generating profit becomes even trickier since online is almost synonymous to free content.

An obvious solution for generating profit offline and on is advertising. The advertising process in the nonvirtual world, while always evolving, is more or less established and understood. Online, however, it can still be difficult to evaluate its effectiveness. Recent developments in behavioral targeting on the web and social ad services help advertisers more effectively target website visitors.

Macrovision, based in Santa Clara, Calif., has developed just such a solution for information publishers, a group that continues to have difficulty maximizing the value of online content. According to Macrovision’s public relations manager Laura Quach, “For publications that are looking to maintain their profits through increased online readership, subscription-based or limited access doesn’t always work. To survive, they need a method of catering to their readership as well as showing advertising value to sponsors.”

Macrovision’s Content Access Control Solution allows information publishers to bring content to market using different business models, one of which is the exchange of personal information for access to content. Steve Schmidt, the company’s VP of product management, explains the basics of this aspect of Macrovision’s Content Access Control Solution, called Advance Registration: “The information publisher can set up a registration process where the user answers questions on a survey. The first time the user visits the site, she may be asked certain questions. The second visit may generate further questions. And the questions asked are the result of logical branching. The information collected can be aggregated to tailor ads.” Tailored ads means advertising space can be sold at a higher rate. The information publisher makes more revenue from ad space, advertisers deliver ads to more likely prospects, and readers gain free access to content.

Macrovision is just the service provider, however. Schmidt had little to say about the controversy over collecting personal information in exchange for free content. As he explained, “Macrovision gives guidance, but the information publisher decides how long personal data is kept. It is up to the customer to set up an obligation to exchange information, or not. The information publisher also decides what content is available depending on the questions answered and how they’re answered.”

It would appear then that most companies collect personal information for any number of seemingly harmless reasons, including increasing revenue and providing better services.

Yet according to my cousin Michelle, the price of admission may be too high: “I generally hate filling out surveys or answering questions,” she says, “but I know that if I had to do it to access information I wanted to see, I would. Obviously, there are limits as to what information I would be willing to give out on a survey but if I could just make up a fake email address and answer a few simple questions, I would—but would be annoyed while doing it.” Ah, the lure of free content.

Yet this direct Q&A method isn’t the only way to gather personal information about us. What about companies that provide a free service, like search, and don’t require registration? What information are we giving up when we Google the celebrity du jour’s latest escapades or research an illness or job market?

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