Digitrends, Engage Spark Database Controversies

When a company dies, who gets the database? It’s not a new controversy, as those who followed the ToySmart controversy can attest, but this week two separate cases in the online marketing community — one involving Digitrends and the other stemming from Engage’s recent woes — have highlighted issues surrounding the ownership of these valuable storehouses of intellectual property.

The first spat, involving troubled publisher and conference organizer Digitrends, started rumors swirling around the industry after Digitrends’ Andrew Batkin alleged (in an email to all of his newsletter subscribers) that there had been an outright theft of the company’s database of contacts for its conferences business.

In the email to members, Batkin alleged that the database — “that we spent millions of dollars and four years to develop, to bring interactive media buyers and sellers together” — is now being used to promote an event that competes with Digitrends’ Media Buyers’ Summit.

“I appeal to your sense of fair play, our long standing reputation, as well as our attempt to protect and secure the value of the assets of Digitrends and urge you to NOT support this competing event!” Batkin said in the email.

Apparently on the receiving end of Batkin’s tirade is Rick Parkhill, a co-founder of Digitrends who now runs his own event coordination firm, Laguna Niguel, Calif.-based Parkhill Productions. Although Parkhill recently announced an industry event of his own, he fired back in published reports that he not only didn’t steal the Digitrends database, but is marketing his event using his own contacts. Parkhill did not return repeated phone calls seeking comment for this story.

The second significant event that throws the issue into the spotlight involves not only the principal players, but also a vast number of consumers. Earlier this week, online ad network and technology firm Engage said its parent, Internet holding company CMGI, had not renewed its $50 million financial support agreement — leading many to wonder whether Engage would resort to selling its massive database of anonymous profiles.

There’s no proof to suggest that Engage is actually considering the sale of its database, which houses anonymous, cookie-based profiles on about 93 million Web users. But that’s not stopping privacy advocates from raising the alarm.

“Using relatively simple tricks, anonymous cookies can be matched at any time with email addresses and/or names and addresses,” said Richard Smith, who is chief technical officer at the Washington, D.C.-based Privacy Foundation. “Engage has promised that they will never do this, but will a buyer be willing to make the same promise?”

“Privacy folks will oppose any efforts by Engage to sell off their anonymous online profiles database to other companies,” he said.

While Engage isn’t discussing plans for bringing in new funds, it does maintain that the controversy is unwarranted.

“People are jumping to conclusions not necessarily supported by the facts,” said spokesman Mark Horan, who added that Engage is ahead of the pack when it comes to privacy.

While there’s not a specific stipulation in Engage’s privacy policy prohibiting a buyer from doing whatever it wanted with its database, Engage has contractual deals with the publishers it work with, requiring them to give notice of profiling to their own consumers.

But so far, that’s not enough to placate critics.

“There’s numerous opportunity to very easily identify previously anonymous records,” said Jason Catlett, who is president of anti-spam firm Junkbusters. “That’s the radioactive quality of cookies, that they can come back after a long time and bite you by being combined with personal information.”

And more worrisome to privacy watchdogs, federal, state and industry self-regulating authorities are becoming bogged down watching the ever-increasing number of dot-coms that might be circumventing their own privacy policies.

“It’s a well-established trend. Every week, I read about some new database going on the chopping block. With the tech wreck and so many of the Internet companies running out of money, it’s an endemic problem for privacy,” Catlett said.

Unlike in the ToySmart case earlier this year — in which state and federal authorities put pressure on the company to not sell its consumer database — it’s becoming difficult for regulators to keep tabs on dot-com privacy, according to critics.

“In that case, which was the first and most famous example of this, a large number of parties were drawing attention to that one database,” Catlett said. “But now when are so many, its difficult to get any coordinated attention to it.”

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