SCN: Privacy

[Steve]

x-no-archive: yes

===================


(Saul Hansell, NY Times, excerpts)---Pressed for profits, Internet 
companies are increasingly selling access to their users' postal 
mail addresses and telephone numbers, in addition to flooding 
their e-mail boxes with junk mail.  

Yahoo...just changed its privacy policy to make it clear that it has 
the right to send mail and make sales calls to tens of millions of its 
registered users. And it has given itself permission to send users e-
mail marketing messages on behalf of its own growing family of 
services, even if those users had previously asked not to receive 
any marketing from Yahoo. Users have 60 days to go to a page on 
Yahoo's Web site where they can record a choice not to receive 
telephone, postal or e-mail messages in various categories.  

Similarly, when Excite...was sold in bankruptcy court late last year, 
the new owner asked Excite users to accept a privacy policy that 
explicitly allows it to rent their names and phone numbers to 
marketing companies. (Those users, too, could check a box on the 
site to opt out of such programs, if they had not already done so on 
the old Excite.)  

The sites say that direct marketing to their users, both by e-mail 
and by older means, is an important source of revenue that can 
help make up for the rapid decline in sales of online advertising.  

"It has been our orientation from the beginning to be 
straightforward with the user," said Bill Daugherty, the co-chief 
executive of the Excite Network. "They are getting free content and 
utility that is unparalleled, and in return we will be marketing 
products to them."  

But even many marketing experts say that the risk to the 
reputations of these companies may outweigh any revenue they 
may receive.  

"What Yahoo has done is unconscionable," said Seth Godin, 
Yahoo's former vice president for direct marketing. "It's a bad thing, 
and it's bad for business. They would be better off sending offers 
to a million people who said they want to receive a coupon each 
day than to send them to 10 million people and worry about 
whether you have offended them by finally going too far."

Both Yahoo and Excite say they are not loosening their privacy 
policies, just making them more explicit. In the past, both 
companies simply asked users to check a box authorizing the Web 
sites to "contact" them with marketing messages. The sites assert 
that such wording did not rule out mail and telephone contacts in 
addition to e-mail messages.  

Privacy experts say such a legalistic interpretation of the privacy 
policy is at best misleading because, in practice, almost all contact 
from the sites has been by e-mail. "It's unfair," said Mark 
Rotenberg, executive director of the Electronic Privacy Information 
Center. "People thought they were going to get e-mail solicitations. 
They didn't expect that their dealings with Yahoo would cause 
them to receive phone calls."  

Both Yahoo and Excite say they have not actually used users' 
phone numbers for any marketing programs so far and have made 
relatively few mailings to members.  

Other sites have been much more liberal in renting customer 
names. America Online has long rented customer addresses, and 
it also calls users to promote its services and those of its business 
partners. Lycos...and...ZDNet, a technology site, also rent users' 
names through mailing-list brokers.  

For example, Direct Media, a mailing list broker...offers access to 
2.9 million Lycos users at a cost of $125 per thousand names for a 
single mailing. (An extra $15 per thousand lets marketers select 
users showing an interest in a topic like cats or gambling.) 
Advertisers typically pay for the right to send a single mailing or 
make a single phone call to a name on a list they rent; they do not 
own the information outright.  

Stephen J. Killeen, the United States president of Terra Lycos, the 
parent of the Lycos portal, said mailing list rentals were a small but 
growing part of its marketing revenue. It does not yet rent phone 
numbers, a service that has a smaller market. "We look at 
ourselves as a way to match the right consumer with the right 
product, whatever the medium," Mr. Killeen said. "A lot of 
advertisers are looking at the Internet as part of integrated 
marketing campaigns."  

The privacy policy of Microsoft's MSN portal lets it send mail and 
make phone calls to customers on behalf of advertisers, but it has 
yet to do so. Microsoft lets users specify whether they do not want 
marketing via e-mail, postal mail or phone.  

"We value our customers' privacy," said Brian Gluth, a senior 
product manager at MSN, "and we have never changed a 
customer's preference of opt-in or opt-out, like some of our 
competitors have done."  

In many ways the Internet is simply joining the mainstream of 
American business, where the names of people who subscribe to 
magazines and who buy from catalogs are freely traded.  

Yahoo says its move to send mail and make calls to users on 
behalf of advertisers is far more limited than simply renting its 
customer file to companies with no relationship to Yahoo. It 
compares itself with American Express, which has long sent offers 
to cardholders for its own services, like insurance, and for those of 
other companies, like airlines and department stores.  

"To the extent we have been successful," said Lisa Nash, Yahoo's 
director of consumer and direct marketing, "it's because we have 
been extremely respectful of our users' time. We fully plan to 
continue that." She said the company had no immediate plans to 
start telemarketing programs, but she added, "We intend to have 
maximum flexibility."  

Ms. Nash said, however, that Yahoo's biggest objective in its new 
policy was to give it more freedom to sell its own services rather 
than those of its advertisers. Yahoo has been trying to recover 
from the slowdown in online advertising by introducing a raft of 
new fee-based offerings, like online games and expanded e-mail 
services.  

Unlike other sites, Yahoo has never asked users specifically if they 
want to receive information about its own services. Rather, it has 
asked a single question authorizing it to send both messages for 
Yahoo services and messages for advertisers (which include 
Columbia House and the Discover Card...

Now Yahoo has sent tens of millions of users e-mail messages 
saying that it has given itself permission to send messages on 
behalf of its own services. Users have 60 days to go to a section of 
the site (subscribe.yahoo.com/showaccount) and reject such 
messages in 13 categories - one by one. The categories range 
from games to job hunting.  

The distinction between messages from Yahoo and those from 
advertisers is not always clear because many companies do 
business under the Yahoo umbrella. Yahoo's travel channel, for 
example, is largely a Yahoo-brand version of the Travelocity online 
travel agent. Similarly, a message about back-to-school specials 
on Yahoo's shopping channel, for example, could well be paid 
advertising from some of the more than 10,000 stores in Yahoo's 
online mall.  

"We believe in the products and services we offer," said Srinjia 
Srinivasan, vice president and editor in chief at Yahoo. "Our 
network has grown so much we want to tell users about them."  

Truste, a nonprofit group financed by Internet companies that 
creates standards for privacy policies, agreed to endorse Yahoo's 
move after an extended discussion with the company. "I would not 
call what Yahoo did 'best practices,'" said Fran Maier, the group's 
executive director. "To the extent possible, you would like 
companies to honor the preferences that were previously set by 
the users. But on the other hand, we don't want to tell companies 
they can't do something when their business strategy changes. We 
have to balance those things."  


Copyright 2002 The New York Times Company




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