The Data Bubble II

In The Data Bubble, I told readers to mark the day: 31 July 2010. That’s when The Wall Street Journal published The Web’s Gold Mine: Your Secrets, subtitled A Journal investigation finds that one of the fastest-growing businesses on the Internet is the business of spying on consumers. First in a series. That same series is now nine stories long, not counting the introduction and a long list of related pieces. Here’s the current list:

  1. The Web’s Gold Mine: What They Know About You
  2. Microsoft Quashed Bid to Boost Web Privacy
  3. On the Web’s Cutting Edge: Anonymity in Name Only
  4. Stalking by Cell Phone
  5. Google Agonizes Over Privacy
  6. Kids Face Intensive Tracking on Web
  7. ‘Scrapers’ Dig Deep for Data on the Web
  8. Facebook in Privacy Breach
  9. A Web Pioneer Profiles Users By Name

Related pieces—

Two things I especially like about all this. First, Julia Angwin and her team are doing a terrific job of old-fashioned investigative journalism here. Kudos for that. Second, the whole series stands on the side of readers. The second person voice (you, your) is directed to individual persons—the same persons who do not sit at the tables of decision-makers in this crazy new hyper-personalized advertising business.

To measure the delta of change in that business, start with John Battelle‘s Conversational Marketing series (post 1, post 2, post 3) from early 2007, and then his post Identity and the Independent Web, from last week. In the former he writes about how the need for companies to converse directly with customers and prospects is both inevitable and transformative. He even kindly links to The Cluetrain Manifesto (behind the phrase “brands are conversations”).

In his latest he observes some changes in the Web itself:

Here’s one major architectural pattern I’ve noticed: the emergence of two distinct territories across the web landscape. One I’ll call the “Dependent Web,” the other is its converse: The “Independent Web.”

The Dependent Web is dominated by companies that deliver services, content and advertising based on who that service believes you to be: What you see on these sites “depends” on their proprietary model of your identity, including what you’ve done in the past, what you’re doing right now, what “cohorts” you might fall into based on third- or first-party data and algorithms, and any number of other robust signals.

The Independent Web, for the most part, does not shift its content or services based on who you are. However, in the past few years, a large group of these sites have begun to use Dependent Web algorithms and services to deliver advertising based on who you are.

A Shift In How The Web Works?

And therein lies the itch I’m looking to scratch: With Facebook’s push to export its version of the social graph across the Independent Web; Google’s efforts to personalize display via AdSense and Doubleclick; AOL, Yahoo and Demand building search-driven content farms, and the rise of data-driven ad exchanges and “Demand Side Platforms” to manage revenue for it all, it’s clear that we’re in the early phases of a major shift in the texture and experience of the web.

He goes on to talk about how “these services match their model of your identity to an extraordinary machinery of marketing dollars“, and how

When we’re “on” Facebook, Google, or Twitter, we’re plugged into an infrastructure (in the case of the latter two, it may be a distributed infrastructure) that locks onto us, serving us content and commerce in an automated but increasingly sophisticated fashion. Sure, we navigate around, in control of our experience, but the fact is, the choices provided to us as we navigate are increasingly driven by algorithms modeled on the service’s understanding of our identity.

And here is where we get to the deepest, most critical problem: Their understanding of our identity is not the same as our understanding of our identity. What they have are a bunch of derived assumptions that may or may not be correct; and even if they are, they are not ours. This is a difference in kind, not degree. It doesn’t matter how personalized anybody makes advertising targeted at us. Who we are is something we possess and control—or would at least like to think we do—no matter how well some of us (such as advertisers) rationalize the “socially derived” natures of our identities in the world.

It is standard for people in the ad business to equate assent with approval, and John’s take on this is a good example of that. Sez he,

We know this, and we’re cool with the deal.

In fact we don’t know, we’re not cool with it, and it isn’t a deal.

If we knew, the Wall Street Journal wouldn’t have a reason to clue us in at such length.

We’re cool with it only to the degree that we are uncomplaining about it—so far.

And it isn’t a “deal” because nothing was ever negotiated.

On that last point, our “deals” with vendors on the Web are agreements in name only. Specifically, they are a breed of assent called contracts of adhesion. Also called standard form or boilerplate contracts, they are what you get when a dominant party sets all the terms, there is no room for negotiation, and the submissive party has a choice only to accept the terms or walk away. The term “adhesion” refers to the nailed-down nature of the submissive party’s position, while the dominant party is free to change the terms any time it wishes. Next time you “agree” to terms you haven’t read, go read them and see where it says the other party reserves the right to change the terms.

There is a good reason why we have had these kinds of agreements since the dawn of e-commerce. It’s because that’s the way the Web was built. Only one party—the one with the servers and the services—was in a position to say what was what. It’s still that way. The best slide I’ve seen in the last several years is one of Phil Windley‘s. It says,

HISTORY OF E-COMMERCE

1995: Invention of the Cookie.

The End.

About all we’ve done since 1995 on the sell side is improve the cookie-based system of “relating” to users. This is a one-way take-it-or-leave-it system that has become lame and pernicious in the extreme. We can and should do better than that.

Phil’s own company, Kynetx, has come up with a whole new schema. Besides clients and servers (which don’t go away), you’ve got end points, events, rules and rules engines to execute the rules. David Siegel’s excellent book, The Power of Pull, describes how the Semantic Web also offers a rich and far more flexible and useful alternative to the Web’s old skool model. His post yesterday is a perfect example of liberated thinking and planning that transcends the old cookie-limited world. The man is on fire. Dig his first paragraph:

Monday I talked about the social networking bubble. Marketers are getting sucked into the social-networking vortex and can’t find their way out. The problem is that most companies are trying small tactical improvements, hoping to improve sales a bit and trying tactical savings programs, hoping to improve margins a bit. Yet there’s a whole new curve of efficiency waiting in the world of pull. It’s time to start talking about savingtrillions, not millions. Companies should think in terms of big, strategic, double-digit improvements, new markets, and new ways to cooperate. Here is a road map

Read on. (I love that he calls social networking a “bubble”. I’m with that.)

This week at IIW in Mountain View, we’re going to be talking about, and working on, improving markets from the buyers’ side. (Through VRM and other means.) On the table will be whole new ways of relating, starting with systems by which users and customers can offer their own terms of engagement, their own policies, their own preferences (even their own prices and payment options)—and by which sellers and site operators can signal their openness to those terms (even if they’re not yet ready to accept them). The idea here is to get buyers out of their shells and sellers out of their silos, so they can meet and deal for real in a truly open marketplace. (This doesn’t have to be complicated. A lot of it can be automated. And, if we do it right, we can skip a lot of the pointless one-sided agreement-clicking friction we now take for granted.)

Right now it’s hard to argue against all the money being spent (and therefore made) in the personalized advertising business—just like it was hard to argue against the bubble in tech stock prices in 1999 and in home prices in 2004. But we need to come to our senses here, and develop new and better systems by which demand and supply can meet and deal with each other as equally powerful parties in the open marketplace. Some of the tech we need for that is coming into being right now. That’s what we should be following. Not just whether Google, Facebook or Twitter will do the best job of putting crosshairs on our backs.

John’s right that the split is between dependence and independence. But the split that matters most is between yesterday’s dependence and tomorrow’s independence—for ourselves. If we want a truly conversational economy, we’re going to need individuals who are independent and self-empowered. Once we have that, the level of economic activity that follows will be a lot higher, and a lot more productive, than we’re getting now just by improving the world’s biggest guesswork business.

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16 comments

  1. John Hagel’s avatar

    Beautiful, beautiful post, Doc! Brings back to mind the concept of an infomediary which I developed in my book, Net Worth, back in 1999. We may finally be on the cusp of a profound shift to customer agents who help us to accumulate rich profiles of our activities and then help us to connect to the people and resources that are most relevant to us. This is part of a big shift described in Net Worth away from viewing markets as about suppliers seeking out customers to sell more and more products and services to and towards a much more productive view of markets as about customers acquiring tools and capability to discover relevant suppliers at relevant times – a reverse market perspective that challenges the mindset of most executives. Stay tuned, much more to come.

  2. gregorylent’s avatar

    technology is slowly approaching the abilities that psychics have always had … this is unstoppable, simply because of the nature of consciousness that is creating technology in its own likeness

  3. Giovanni’s avatar

    Tremendous, Doc. Thanks for pulling this together.

  4. Jim H’s avatar

    My only complaint is, a. that this is called “social media,” when it’s really just allowing the data mining of our relationships — or quasi-relationships — on the web.

    The other recent story that’s completely wrong is the rumor about Apple buying Facebook or something else like that. Facebook, like MySpace, is a moving target that will be abandoned for some other platform within five years.

  5. Ron’s avatar

    This subject is definitely both fascinating and scary at the same time. As technology in this area increases, I believe more and more people’s world views are going to continue to narrow. For example, when the average person wants to learn about something, typically they search on Google and usually believe what they find to be true. However, Google is already using technology that shows people results that “it” thinks they want to see purely based on their internet habits.

  6. Lucretia Pruitt’s avatar

    One of the most powerful phrases in the consumer’s vocabulary is “informed consent” — it’s completely different than the current model we see, isn’t it?
    Terribly important distinction between agreeing to something and being subjected to it.
    Great article Doc – hope it is widely read.

  7. Will Rowan’s avatar

    Cracking post, Doc.

    As noted by Jim H, so far we’re only seeing ever-deeper mining of data to deliver content.

    It’s not always done that intelligently: why track’n'serve me a buy now ad, when I just bought precisely what you’re advertising?
    - the tracking toolset is sophisticated enough to follow what I just did on a site, as serve me appropriate ad content as I navigate elsewhere. I’d share *more* data to a firm that respected my current purpose.
    - I’m too busy to manage every commercial relationship: I need these automated systems to help me out
    Until VRM-thinking kicks into this equation, and brings customers into the equation, these “relationship marketing” campaigns are the sound of one hand clapping. Relationships take two…

  8. KD’s avatar

    The links numbered 2 and 3 are identical.

  9. Jamie Clark’s avatar

    Strongly agree with the “contracts of adhesion” point.
    A problem is that traditional legal contracts analysis,
    like balance sheets, has long undervalued information
    as a tradeable good. We don’t do enough to support
    transactions and promises about consumer data because,
    in spite of its value, law and regulation haven’t caught
    up with reality yet.
    The idea that enterprises could “signal willingness to
    deal” on customer-centric terms is inspiring. But how?
    What kind of “bargaining” is possible within the severe
    constraints of UIs?
    See you at IIW.

  10. lokfoo’s avatar

    “If we want a truly conversational economy, we’re going to need individuals who are independent and self-empowered.”

    Great insight. The question seems to come back to education (which rather implies a top down thing) for want of a better word. While we have a will to become empowered, we cannot be independent all the time. Users need facilitation. A lot of it.

  11. Doc Searls’s avatar

    Thanks, John. I’m honored as well as flattered.

    I should add that Net Worth has had an influence on me, both when it came out in ’99 and since then. For example, its DNA is certainly in the fourth party concept.

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