A year ago, at a cover meeting at BusinessWeek, I
proposed a big story: The Privacy Pay-off. The idea was that tracking
and other data surveillance would spark a reaction: People would fear
for their privacy. And this would create all sorts of business
opportunities, the privacy pay-off.
It sounded like a plausible
idea to the editors. So I went off hunting for companies cashing in on
this expanding new market. I figured that certain advertisers would seek
competitive advantage by offering privacy guarantees. I hoped that at
least a couple would transform their privacy statements, changing them
from unreadable legalese into a clear and compelling promise. Someone,
somewhere had to be turning privacy statements into marketing tools.
also talked to the research divisions of major tech companies. They had
to be developing technology to help individuals manage and defend their
privacy in a data-driven world.
Long story short: I did lots of
research, and I never found the cover story. Sure, I picked up threads
of it. EMC's Mozy service, for example,
offers cloud-based data storage with military-grade encryption. It costs
more than, say, Google Docs. That's the privacy premium. Researchers at
Microsoft, HP and IBM were coming up with new filters and tools. I
learned about data records that "aged," vanishing after six months or a
year. That Viagra receipt you might not want marketers to see would go
poof. A hint of privacy pay-off? Perhaps.
This new market
requires awareness, and feeds on fear. Last week's Wall Street Journal series on
privacy, which carried some provocative headlines, provides a dose of
that. And now I see that others are pointing to the market potential for
privacy. Jeff Jarvis agrees with
me. Fred Wilson does too. Wilson, a
VC, holds investments in Twitter, Foursquare, and other start-ups built
on publicness (Jarvis' word). And yet Wilson says:
are business opportunities in privacy-related services...The challenge
is to get someone [whether business or consumer] to pay $2-$10 dollars
per month to ensure that sort of premium privacy."
researched my doomed story, I saw two mass-market data economies taking
shape. One, the free economy (embodied by Google), provides users with
near limitless services free of charge, and in return asks only for
their data. It gains intelligence from that data, which supports its
The second (and far smaller) data economy is built upon
distrust. If you place your private data--your clickstream, your
finances, health records, kids pictures, your location, social
network--onto the networks, people will take advantage of you, harm you,
spill your secrets, steal from you. So pay a privacy premium and stay
safe. This is the policy companies have been following for decades, and
now outfits like Mozy are offering these services to individuals.
still grappling with the question of why the privacy payoff is taking
so long to materialize. I think it has a lot to do with two basic
factors. First, people tell pollsters they care about privacy. But they
also like free stuff and hate to pay premiums, especially in a down
economy. Second, despite all the fears about privacy, people have reason
to share lots of their data. Far beyond gossip, there's a value to it.
It connects people to friends, answers, insights, business
opportunities. For proof, look no further than the half billion folks on
Facebook, or at Fred Wilson's thriving portfolio. Even cookies serve a
useful function. (Erase them and you'll go crazy typing passwords to
visit Web sites.)
Yes, I still believe the privacy pay-off will
come. Turning privacy policies into marketing opportunities seems like a
no-brainer. Smart filters will sell. But given the power of the free
and public data economy, I suspect the privacy-wing will remain a niche
market. In BusinessWeek lingo, a six-column story, not a cover.