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OpenPrivacy.org

What a Profile Is (and How Profile Data Is Used)

When we talk of a person's profile we are referring to a store of information that may include one's name, age, gender, phone number, postal or electronic mail address, purchase history, web surfing habits, subscriptions or any of a multitude of personal preferences, traits and abilities. Often, a persistent cookie is deposited by a company's web site on one's computer or other personal information device so that the company can track the individual's behavior as they browse the company's site. More advanced systems, such as those used by DoubleClick, can track a person from site to site. The capability to accumulate and cross-reference this data is what supports the multi-billion dollar direct marketing industry.

Data Mining

Technology enables the collection and storage of vast quantities of data. Finding, summarizing, and creating models of the patterns, trends and projections from this data is what data mining is all about. It is a marriage of statistics, machine learning, information theory and computing that has formed a mathematical base for a science that has increasingly powerful tools at its disposal. In particular, direct marketers have created data mining techniques that allow them to pinpoint desired market segments for inclusion in their advertising and marketing campaigns.

The manner in which personal (profile) information is collected and used today is grossly inefficient not to mention a massive violation of privacy. It [current standard practice] developed over the course of the last hundred years as capitalism matured and corporations grew more powerful. New, precise mechanisms could replace the current shotgun approach, but Industry is so far along the path paved by their marketers that they can't see the opportunity. (Remember that the marketers were originally beholden to Industry, but now Industry is beholden to the marketers.) Their fear, reinforced by the marketers, is that without a person's name, address, phone number and/or email address, they will not be able to reach the people who may be most interested in the products or services that they are trying to sell.

[See also the report from the Direct Marketing Association:
Web-Mining: New Data Tools to Manage Web Strategy]

Collaborative Filtering and Recommendation Systems

The data mining of anonymous data can have its uses, as in simple collaborative filtering systems. These systems collect inputs from many potentially anonymous people on a particular subject (say, what their current favorite movie is) and then average the results and come up with recommendations. This works with reasonable accuracy in a well behaved populace - that is, within a group that does not have shills and spoofers that may attempt to throw the decision one way or the other by flooding the system with bogus or weighted inputs.

Direct ("One-to-One") Marketing

For traditional direct marketing mechanisms to work, profile data must be linkable to the people that it refers to so that they may be reached by phone, mail (electronic or physical), banner ads or regional advertising campaigns. The value of such information is immense. One vivid example can be seen in the acquisition of Hotmail by Microsoft for a total of $395 million. While the software to create such a system was trivial, what Microsoft actually bought was the access to Hotmail's 10 million users. Another view as to the value of personal profile information can be seen by looking at the sales figures attributed to direct marketing:

U.S. sales revenue attributable to direct marketing is estimated to reach more than $1.7 trillion in 2000. Through 2005, sales are estimated to grow by 9.6 percent annually to reach $2.7 trillion.
[DMA report: Economic Impact: U.S. Direct Marketing Today Executive Summary]

Further, the Direct Marketing Association predicts that
Direct Marketing's E-Growth Projected to Exceed Rest Of Web In 2001.

Privacy Concerns

Once all this data is collected, there are many ways that it can be used and disseminated by the corporations and government agencies that obtain it. In the simplest cases, one's profile data may be mined for direct mail or demographically-directed marketing campaigns. But it may also be used to determine health care and insurance premiums, credit ratings, and any of a myriad of other uses that the trillion dollar marketing industry may find useful.

While it is reasonable that a vendor can check one's credit before extending same, should that vendor then be allowed to sell that credit information - attached to your name and address - to any and all takers? And as mentioned above, such trade in personal information is not limited to one's credit-worthiness, but also includes school, work and health records, purchase and travel history, and even sexual preferences. It is clear why many privacy advocates are raising alarms as we become the most tracked and watched society.

While companies involved in e-commerce are placing "privacy policy" declarations linked from their home page, they may change these without warning at any time [insert Amazon reference here] or perhaps simply get bought, as with Hotmail discussed above. In Europe, there are strong laws that govern the collection and storage of profile data. These statutes allow for only the collection of data needed for a transaction (such as a credit report) and require that this data be destroyed when no longer needed. However, the United States offers no such protection, and as activists raise concerns, they are met with an industry that offers only "voluntary compliance" with no legal means to enforce adherence to any particular policy.

[Privacy page from the DMA: <http://www.the-dma.org/library/privacy/index.shtml>]



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Historical note: OpenPrivacy closed its virtual doors in May of 2002.
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