What is wireless privacy worth?
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By Tim Mullaney, Special for USA TODAY
The brouhaha in recent weeks over how much data wireless phones are collecting brings back a question that has been around since the Web's earliest days: Why do companies collect so much data about you, do consumers get anything in exchange for letting them do it, and what should consumers do about it?
I've been writing about this since one of my first stories for BusinessWeek 12 years ago, which is worth rereading even now -- just not yet, please. In it, marketing professor and privacy expert Mary Culnan explains that when you buy something online, you really make two different trades. In one, you exchange hard-earned cash for something of value -- food, an airline ticket, take your pick. In the other, you trade the knowledge of what you just bought, and other purchases you make, for the privilege (if you think it's that) of getting offers from marketers that are tailored to your needs and desires. Culnan called this deal "the second exchange,'' and you can't much understand the debate over collecting location data without it.
The idea that getting offers in exchange for information strikes many as self-serving hype from marketers, but is it really? After 10 years of the Web, this targeting is now getting pretty good: I routinely see ads not just for Web sites I hit sometimes, but often for a specific watch I checked out at Overstock.com, or for the hotel chain where I'm a frequent-guest member. There's a good reason for marketers to think you and I will bite on those marks.
The Internet didn't invent this kind of manipulation and tracking -- it just came closer to perfecting it. Visa has done it for years. Supermarkets do it by swapping cheap strawberries for the right to track your whole grocery order and give you coupons for your next visit on things that are just like the stuff in your cart. Culnan walked me through parts of her own life: She had an American Express card because her AmEx points were valuable enough to trade information for, and didn't have a grocery-store card because the coupons she got didn't interest her enough to let someone paw through information as personal as how and what she ate.
Location data isn't fundamentally different. Drivers on toll roads have been making a second exchange, of giving up location data in exchange for convenience and discounts, for as long as there has been an EZ-Pass system. And EZ-Pass delivers your information to the state, not just to some advertisers. People do it because, well, have you tried the cash lane at the George Washington Bridge lately? (I have always skipped EZ-Pass because it doesn't save me enough time to make me tell the state of New Jersey where I go.) Now services like Loopt and Foursquare are laying the groundwork for a revolution that is making commerce more useful. Within a year or two, startups will be able to beam ads, answers and discounts to people who are just walking by a store that has a product they might want to buy, venture capitalist Forest Baskett of New Enterprise Associates in Silicon Valley says. "If you're a Mom with two kids, we can find you an ice cream shop," he said. "We can deliver something specifically interesting to you, instead of just a billboard."
And if you don't like it, it's easy to opt out of these services by making a few choices in the software on your phone or PC. Most people don't bother -- some because they don't know how, many because they don't care that much about protecting the privacy of activities that aren't illicit or all that interesting, and more than a few because they find it useful to get a coupon for a new brand of ketchup or to be told where an ice-cream shop is.
In other words, it's capitalism. Everyone gets to make their own choice and live with the consequences, aided by a little disclosure so they know what they might sacrifice in the second exchange. And that's a system that has done pretty well by consumers for a long time.
So do me a favor: Answer the poll question today, or this weekend. Drop a comment in the comment box. Or e-mail me. And next week I'll round up the results in another post.
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