Free Data No More

Only half of Americans answered their Census forms by the April 11 deadline this year, sharply down from previous decades. It’s not that people are ignorant or unpatriotic. Many refused because they are sick and tired of giving away data about themselves for free, and distrustful of what institutions are doing with it.

Think of this year’s Census as a bellwether for data collection in the future. For online marketers, the rules are changing. And it’s your customers who are rewriting them.

People don’t mind giving away information about themselves; they just want something in return. The Internet is a highly efficient system for identifying and commodifying value, and since data has value, customers will increasingly expect something back from marketers who want to track their usage and preferences.

Consumers are claiming their data as a property right, and there are a number of reasons why.

The first is privacy hype. The media loves to tell stories about how marketers and other scoundrels gather and sell personal information. And the government is taking action; there are dozens of “Privacy Protection” bills that have been introduced in Congress this year.

The second reason is that companies like DoubleClick, which trumpeted data-driven business models that offered no more to consumers than targeted ads, killed the Golden Goose of online data collection. You can’t extract too much value from consumers without a backlash. Now even a nice word like “cookie” has malicious overtones.

Third, Internet technology inexorably evolves to give power to customers. That power is extending to personal data, and examples abound. Companies like NetZero trade consumers a service for their data. Services like Anonymizer make surfing incognito easy. Why should the consumer give away knowledge of their habits for free?

It goes beyond privacy; it’s about ownership. Consumers are beginning to ask, “Why should a company make money off knowing who I am?” Consumers want a piece of the action.

Next-generation search engines, like NetFlip.com, give kickbacks to consumers for their attention (clicking links). They teach consumers to understand the material value of their own eyeballs. The same is happening for personal data. Customers will want to be paid for a commodity they feel is rightfully theirs.

If you know what your customers’ data is worth (and you should), you need to figure out what you can offer them back for it. Because sooner or later, your customers will realize what the value of their personal data is. And they might want their money back.

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