Posted on 14-4-2002
Profit
Before Privacy - The Heart Of Spam
by Alan Marston drawing on article in NY Times by Saul Hansell
In pursuit of elusive profits more and more Internet companies
are selling
access to their users' postal mail addresses and telephone numbers,
in
addition to flooding their e-mail boxes with junk mail. Junk
mail has
surpassed viruses as the main scourge of the use of email communications
(still the most used Internet service) and instead of Internet
companies
doing their best to prevent it, some are adding to the problem
by
profiteering on their clients private contact details.
I suppose it's a holier-than-thou attitude to say that at the
heart of
PlaNet is respect for the individual, and at the heart of that
is keeping
trust with people's personal information. So be it. The day
PlaNet profits
from people's privacy is the day it will have to change its
name to reflect
a change in its nature.
The most recent seller of souls is yahoo.com The vast Internet
portal, just
changed its privacy policy to make it clear that it has the
right to send
mail and make sales calls to tens of millions of its registered
users. And
it has given itself permission to send users e-mail marketing
messages on
behalf of its own growing family of services, even if those
users had
previously asked not to receive any marketing from Yahoo. Users
have 60
days to go to a page on Yahoo's Web site where they can record
a choice not
to receive telephone, postal or e-mail messages in various categories.
Similarly, when Excite, another big Internet portal, was sold
in bankruptcy
court late last year, the new owner asked Excite users to accept
a privacy
policy that explicitly allows it to rent their names and phone
numbers to
marketing companies. Those users, too, could check a box on
the site to opt
out of such programs, if they had not already done so on the
old Excite.
Facts are stubborn things, and that simply encourages the PR
machine to go
into overdrive. The sites say that direct marketing to their
users, both by
e-mail and by older means, is an important source of revenue
that can help
make up for the rapid decline in sales of online advertising.
"It has been
our orientation from the beginning to be straightforward with
the user,"
said Bill Daugherty, the co-chief executive of the Excite Network.
"They
are getting free content and utility that is unparalleled, and
in return we
will be marketing products to them." But even many marketing
experts say
that the risk to the reputations of these companies may outweigh
any
revenue they may receive. "What Yahoo has done is unconscionable,"
said
Seth Godin, Yahoo's former vice president for direct marketing.
"It's a bad
thing, and it's bad for business. They would be better off sending
offers
to a million people who said they want to receive a coupon each
day than to
send them to 10 million people and worry about whether you have
offended
them by finally going too far." While at Yahoo, Mr. Godin published
"Permission Marketing" (Simon & Schuster, 1999), which argued
that
marketing messages should be sent only to people who ask to
see them.
Spin is in. Both Yahoo and Excite say they are not loosening
their privacy
policies, just making them more explicit. In the past, both
companies
simply asked users to check a box authorizing the Web sites
to "contact"
them with marketing messages. The sites assert that such wording
did not
rule out mail and telephone contacts in addition to e-mail messages.
Privacy experts say such a legalistic interpretation of the
privacy policy
is at best misleading because, in practice, almost all contact
from the
sites has been by e-mail. "It's unfair," said Mark Rotenberg,
executive
director of the Electronic Privacy Information Center. "People
thought they
were going to get e-mail solicitations. They didn't expect that
their
dealings with Yahoo would cause them to receive phone calls."
Both Yahoo
and Excite say they have not actually used users' phone numbers
for any
marketing programs so far and have made relatively few mailings
to members.
Other sites have been much more liberal in renting customer
names. America
Online, the biggest Internet service, has long rented customer
addresses,
and it also calls users to promote its services and those of
its business
partners. Lycos, the big Internet portal, and CNET's ZDNet,
a technology
site, also rent users' names through mailing-list brokers. For
example,
Direct Media, a mailing list broker in Greenwich, Conn., offers
access to
2.9 million Lycos users at a cost of $125 per thousand names
for a single
mailing. (An extra $15 per thousand lets marketers select users
showing an
interest in a topic like cats or gambling.) Advertisers typically
pay for
the right to send a single mailing or make a single phone call
to a name on
a list they rent; they do not own the information outright.
Stephen J. Killeen, the United States president of Terra Lycos
(news/quote
), the parent of the Lycos portal, said mailing list rentals
were a small
but growing part of its marketing revenue. It does not yet rent
phone
numbers, a service that has a smaller market. "We look at ourselves
as a
way to match the right consumer with the right product, whatever
the
medium," Mr. Killeen said. "A lot of advertisers are looking
at the
Internet as part of integrated marketing campaigns." The privacy
policy of
Microsoft (news/quote )'s MSN portal lets it send mail and make
phone calls
to customers on behalf of advertisers, but it has yet to do
so. Microsoft
lets users specify whether they do not want marketing via e-mail,
postal
mail or phone. "We value our customers' privacy," said Brian
Gluth, a
senior product manager at MSN, "and we have never changed a
customer's
preference of opt-in or opt-out, like some of our competitors
have done."
In many ways the Internet is simply joining the mainstream of
American
business, where the names of people who subscribe to magazines
and who buy
from catalogs are freely traded. Steven Sheck, the president
of Infinite
Media, a mailing list broker in White Plains, said he was seeing
an
increase in the number of Web sites renting access to users'
names. "Given
the state of the economy," he said, "Internet companies are
looking at
their customer lists as an asset with which they can generate
revenue."
Spinning out. Yahoo says its move to send mail and make calls
to users on
behalf of advertisers is far more limited than simply renting
its customer
file to companies with no relationship to Yahoo. It compares
itself with
American Express (news/quote ), which has long sent offers to
cardholders
for its own services, like insurance, and for those of other
companies,
like airlines and department stores. "To the extent we have
been
successful," said Lisa Nash, Yahoo's director of consumer and
direct
marketing, "it's because we have been extremely respectful of
our users'
time. We fully plan to continue that." She said the company
had no
immediate plans to start telemarketing programs, but she added,
"We intend
to have maximum flexibility. "We believe in the products and
services we
offer," said Srinjia Srinivasan, vice president and editor in
chief at
Yahoo. "Our network has grown so much we want to tell users
about them."
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