SAN FRANCISCO -- Just last week, RealNetworks provided the Internet world with a case study of data collection gone wrong.
Its RealJukebox software was caught red-handed collecting detailed information on user behavior and sending the data back to the company.
In the aftermath of that embarrassment, do people in the data-collection business worry more about privacy?
People don't.
At least not yet, if the first day of the Personalization Summit was any indication.
"Understand the buyer's DNA," boasted promotions at the booth of exhibitor DataSage.
To promote its targeted email services, Responsys.com featured a cash-grab booth. Attendees were invited to enter the plexiglass booth and flail about for fifteen seconds as they plucked air-blown cash and Responsys coupons out of the air. "Grab your customers," the sign on the booth taunted passersby.
An overflow crowd arrived to investigate personalization goods and services at the two-day show, which winds up Tuesday.
Organizers, who expected about 350 attendees, counted at least 500 people eager to learn the nuts and bolts of data harvesting. Session titles included "Smart Personalization: Building Rich Profiles and Tailoring Content," and "Knowing Your E-Customer."
A single Monday afternoon session, "Customer Intrusion Boundaries" was devoted to privacy issues.
The privacy intrusion of RealNetworks software and the ensuing class action lawsuits didn't seem to have scared anybody.
"There doesn't seem to be much impact," said Nancy Benovich Gilby, referring to RealNetworks intrusion and similar e-commerce developments. Gilby is co-founder and vice president of engineering for MarketSoft, a company with technology for turning personalized information into sales.
"Some folks get it, but I think it's going to take a few more 'data Valdezes' before they really take the time to retrofit their information systems to handle informaiton fairly," said Junkbusters president and privacy advocate Jason Catlett, who spoke at the summit.
"Furthermore, some companies have business models that are predicated on unfair information practices, and I don't see any way of converting them."
Jennifer Meighan, director of market development for E.piphany wasn't surprised that privacy worries weren't front and center at the event.
In her opinion, Meighan said, the news media had over-hyped the RealNetworks story.
"If you provide people with good value, they're not going to be afraid to give you their information," she added.
As for E.piphany's privacy concerns, she said the company is careful to secure all data it collects.
"We handle some very sensitive information, and we take it very very seriously," Meighan said, explaining that E.piphany safeguards its vaults of sensitive personal data through secure firewalls, copyrights, and diligent legal counsel monitoring liability issues.
"The issue is very serious and very important -- but not in the way it's written about," Meighan said.
Still, privacy advocates used the occasion to issue a show-opening warning to Web merchants: Use unfair information practices and you take a business risk.
"Consumers and the government should realize that companies that are collecting detailed information from online consumers without their knowledge and consent are not personalizing -- they are invading privacy," said Electronic Privacy Information Center policy analyst Andrew Shen, in a statement released by the advocacy group.
The statement listed specific fair information practices and said data profiling should be halted until privacy regulations are in place.
MarketSoft's Gilby is also the former director of engineering for Firefly, the now-defunct pioneer of personalization and community-building technology eventually consumed by Microsoft. She said the founders of that company always felt privacy was the first and foremost concern if any Web personalization were to take hold with consumers.
Now, she fears the privacy issue is still subordinate to more primary questions of how to collect data and use it to boost the bottom line. Privacy and profit should go hand-in-hand from the get-go, she said.
When will that start to happen? Christopher Locke, editor in chief of Personalization.com has faith in the watchdog power of the Net itself.
"When companies abuse personal information, the news of that will spread like prairie fire," Locke said. "And those companies will be seriously burned in a way that will affect their market share."
That economic impact was not evident last week. RealNetworks high-flying stock didn't take any hard hits as news of its security breach made headlines and the company scrambled to correct itself.
But privacy matters are eventually going to hit the bottom line, Gilby said. "[RealNetworks' blunder] may not have had a big economic impact, but there's going to come a day when it will."
That's the nature of the Web's still-ongoing learning process, Locke said.
"You'll almost have this Pavlovian training of companies that it's to their disadvantage to take personal information and misuse it," he said. "Because they'll get hurt."
Steve Larsen is the vice president of business development for the Personalization Summit's underwriter, online ad company Net Perceptions. The people at e-businesses he talks to are aware of privacy stories like the one that affected Real Networks, he said.
"I think it does have an impact. If you are not doing full disclosure, you're setting yourself up for a problem at some point."
A focus by Web merchants on privacy can only be gradual, but ultimately the situation will become obvious: "Unless people can trust the people on the other side, commerce won't happen," Larsen said. "Good privacy policies just make good business sense."
