Does $14 Million Worth of Email Addresses Cross the Privacy Line?

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The disconnect between how executives and consumer privacy advocates view email marketing was never more obvious than during the latest hijinks surrounding Barnes & Noble's acquisition of Borders' customer data, including email addresses. As part of the Borders bankruptcy proceedings, Barnes & Noble paid $13.9 million for Borders' intellectual property, including its 48-million customer database. That's a gold mine, or Pandora's box of data, depending on your view of this data. It appears Barnes & Noble got a dose of both.

Barnes & Noble execs who won the data in an auction (that phrase alone is enough to give many industry folks cardiac arrest) thought the data was theirs to use as they see fit, but were forced to reach a compromise, which meant Barnes & Noble was required to send a clear message to customers about its newly purchased data. Court-appointed consumer privacy ombudsman Michael St. Patrick Baxter became the watchdog in order to ensure the data transition to Barnes & Noble was handled appropriately.

The Wall Street Journal reported that Barnes & Noble fought the proactive opt-in approach every step of the way, including providing the proof of the proposed email to Baxter with a two-hour deadline to review (somewhere, email marketers are smiling at this familiar predicament). Barnes & Noble ignored Baxter's comments (again, hits home for email marketing pros), agreeing only to use his proposed subject line, "Important Information Regarding Your Borders Account," and one minor text edit.

Baxter, in court documents, said "It was clear to the ombudsman that a robust and meaningful opt-out was critical to reaching the negotiated privacy related terms of the sale. (Barnes & Noble)'s failure to provide such relevant and material information in the opt-out notice may defeat the very purpose of the notice."

Bottom line: Borders' customers have until Oct. 29 (it appears based on media reports that it was moved from October 15) to opt out of the Barnes & Noble email program. Otherwise, you become part of the Barnes & Noble email program and let me tell you, the frequency isn't light.

Some thoughts on this situation:

• While other brand assets were included in the $13.9 million auction price, one could value the cost-per-email subscriber at $0.29. In a competitive industry like Barnes & Noble plays in, one could see why Barnes & Noble would be attracted to this deal. That is a very low acquisition price in any shape or form.
• Borders' subscribers and customers are likely book-buying consumers who may find Barnes & Noble to be an attractive alternative and a relevant brand. But one would argue, if they wanted emails from Borders, they would sign up for Borders email. Email permission is at its most powerful with an explicit opt-in and this is transferred permission that many will view as unacceptable, unethical, or just creepy. Some will view it as convenient. That is why…
• Execution matters. Clearly, Barnes & Noble executives wanted to preserve as much value in their $14 million investment and that would battle other concerns like privacy and opt-in versus opt-out. I am quite confident that the company probably didn't give too much thought on the actual message or execution of it. It was more likely "it's our data and we are keeping it."

Do you agree? How would you have handled this situation?