Our scenario: let the market handle privacy - includes related articles on the imbalance in power between individuals and big organizations, historical and legal aspects of privacy and a person's value to direct marketers

RELease 1.0, June 30, 1991 by Esther Dyson

OUR SCENARIO: LET THE MARKET HANDLE PRIVACY Certainly economics indicates that companies will eventually want to use e-mail for targeted marketing; it's a powerful, inexpensive means of reaching people, and ideally suited to creating and disseminating tightly targeted messages. So the question is, how do they get to you? Is privacy protected by fiat, so they can only post information or sponsor shows they hope people will find? Or do Prodigy and CompuServe and Dow Jones and other future information services own the information on their customers, and offer to deliver the messages and sell one-time use of their lists for a fee? Or can the advertisers pay a reasonable fee, to agents who want to a commission on those fees, for controlled access to consumers' personal information? We believe the last option is the best, since it offers maximum flexibility, protects individuals' privacy rights, and provides for the maximum flow of information in accordance with people's wishes.

Privacy absolutists say that people want privacy. Period. Marketers say that they need a way to reach consumers, and an absolute right to privacy would be the death of commercial civilization as we know it. Besides, most people (aside from maniac liberals and hackers) like to get junk mail. They appreciate the chance to try out for a sweepstakes; they want the information and opportunities they receive from direct marketers. And finally, say the direct marketers, the more we know about you, the better we'll be able to target our pitches, saving money and trees in the process. You think we like sending stuff to people who don't want it? So ... why not let the consumers themselves decide - and earn a little money in the process? Conventional wisdom regards this as an intriguing idea, but overwhelmingly cumbersome to implement. Right now, the way we do it is negative-option on the one hand, and "We'll offer this movie for free if you'll sit through our commercials," on the other. These are crude, inexact methods that don't allow for nuance or individual control. However, we believe the market could easily take care of the intricacies if the government would simply establish the principle: People own information about themselves. There would be exceptions, of course, just as there are exceptions to other rights, but they would be limited: The IRS has access to your financial data, but only for its own use; there are certain health reporting requirements, and so forth. It's simple: Consumers control the use of their own data. They can sell it on whatever terms they please: one-time use, use only by specified kinds of marketers, and so forth. Of course, there will be abuses, just as there are credit-card scams, insurance frauds and other crimes today, but those are prosecutable crimes, not mere annoyances we're powerless to stop. Large-scale annoyances by reputable corporations will stop. Offerings such as Lotus Marketplace, legal under current inexplicit law, would be illegal. Privacy is paramount Note that the right to own the information includes the right to destroy it - or never to have the details recorded. You can still pay in cash, or destroy all your transactions after one month. In that case, the store that sold you the videotape simply gets a payment from the bank stating that $49.95 was credited to its account for transaction 5839674744. The store has no right to keep your name on file other than to complete the transaction, unless you have expressly consented, and it certainly has no right to sell records of your transactions, although it must transfer them to your data agent (for a fee) at your request. (See below.) The underlying assumption is that data is sacrosanct, and belongs in perpetuity to the generator. He can assign the rights to use it, but in some strong moral sense, it is his. It is kept uniquely (with secure back-ups of course) by a designated data bank, which encrypts and guarantees its integrity. The owner can delete it, but he cannot change it. Nor can he add fictitious transactions to make himself look more attractive to marketers. Right now people sign away their rights without a thought as they swipe their embossed cards through cranky overpriced machines at Comdex, provide their shirt-size and nickname to conference organizers, and fill out influence profiles with inflated estimates of their purchasing influence to gain free subscriptions to InfoWorld and PC Week. But this should change almost naturally as the rights of individuals to their data become established. The birth of an industry The simplest form of control (an extension of what we have now) is a refined negative option: Check here to allow us to reuse your name just four times and get a free gift worth $5 or m0REL" That's fine for your average clothes catalogue, but people will quickly learn to hold out for more. From a Jewelry catalogue, you may get a 3 percent discount on your purchase. From the department of motor vehicles, you may get more, especially if you allow them to specify your brand of car, and especially if it's a Mercedes. From a network service, you may get free or discounted service in return for selling rights to all your transactions, for agreeing to receive targeted mail, or for filling in a preferences" inventory. We can also envision grocery check-outs, alongside the express lane, for people who want coupons and those who don't. Use your credit card or fill in this form, and we'll give you relevant coupons at check-out to use on your next visit, as well as a special insert in a home-delivered copy of Single Suites, Happy Homes or Nuclear Family." Buy the hamburger? You get coupons for both Heinz Ketchup and Hamburger Helper. And you can expect a magazine with a special recipe-and-advertising section in your mailbox soon. But if you prefer, you can buy your six-pack and your cigarettes unrecorded - even if you use a credit card. It's the law. Grocery transactions, of course, are at the low end of the scale, and will be handled in relatively mass-market ways. The more interesting patterns will emerge with more economically interesting behavior. For example, how much of a discount can you get for letting the dealer who sells you a car rent your name? Will American give you three free upgrades for the use of your name and flight data for one year? (Of course, if you fly first-class already, your name is even more valuable.) Personally, weld be delighted if American rented our name to British Airways and we got a free try-it-you'll-like-it upgrade from BA. However, it's not just the rich vs. the poor, for two reasons. Marketers still want to sell ketchup - and so they value information about who buys hamburger, even though the value of that information per person is relatively low. Secondly, there's a high value to information about specific consumption habits - tennis gear, for example, or romance novels or airline tickets or hotels with swimming pools. Marketers' goal is first to find the market to which a product is uniquely valuable and second to avoid the rest. Also, advertising" becomes more of a two-way street: once the contact between vendor and buyer is established, e-mail also allows further communication. Sounds interesting," you might reply. Do you have it in red?" The industry matures Vendors who deal directly with consumers will soon ask for the rights to license consumers' data to third parties. And as marketers start paying up for data, they'll expect data of higher quality - and of course they'll pay more for data about higher-level consumers (payable to those same consumers).(1)