Internet privacy: How companies can turn privacy from threat to opportunity by giving sensitive consumer data to customers.

Commentaries on economics and technology.
June 23 2011 8:12 AM

Go Ahead, Share My Data

How companies can turn privacy from threat to opportunity by giving sensitive consumer data to customers.

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Internet privacy? Click image to expand.
How important is privacy online?

It is a well-known—though questionable—truth in the online community that consumers won't pay for privacy. Accordingly, most companies regard the entire issue warily. For them, privacy means expensive disclosure requirements, constraints on their ability to collect information about their customers, and a potential source of legal liabilities.

So they consult lawyers and I.T. risk specialists to consider their options. They write lengthy disclosure statements that cover every possible use of data so that they cannot be sued. They then hand these statements to their marketing departments, who hide them behind little windows in small type.

In general, these companies see consumer data as something that they can use to target ads or offers, or perhaps that they can sell to third parties, but not as something that consumers themselves might want. Most pundits on both sides—privacy advocates and marketers—don't realize that rather than protecting consumers or hiding from them, companies should be bringing them into the game.

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I believe that successful companies will turn personal data into an asset by giving it back to their customers in an enhanced form. I am not sure exactly how this will happen, but current players will either join this revolution or lose out.

Let's start with the disclosure statement. Most disclosure statements are not designed to be read; they are designed to be clicked on. But some companies actually want their customers to read and understand the statements. They don't want customers who might sue, and, just in case, they want to be able to prove that the customers did understand the risks.

So the leaders in disclosure statements right now tend to be financial and health care companies—and also space-travel and extreme-sports vendors. They sincerely want to let their customers know what they are getting into, because a regretful customer is a vengeful one.

That means making disclosure statements readable. I would suggest turning them into a quiz. The user would not simply click a single button, but would have to select the right button for each question. For example:

What are my chances of dying in space?

A) 5 percent
B) 30 percent
C) 1 to 4 percent (the correct answer, based on experience so far; current spacecraft are believed to be safer)

Now imagine: