| | |  Business News 
Web Start-Ups Offer Bargains for Users’ Data
 Stephanie Clifford - New York Times
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May 31, 2010
| | Aaron Patzer, Mint’s founder, in 2008. He said his idea was simple: “We would data-mine your own data in order to help you.” (Peter DaSilva/New York Times) | |
As concern increases in Washington about the amount of private data online, and as big sites like Facebook draw criticism that they collect consumers’ information in a stealthy manner, many Web start-ups are pursuing a more reciprocal approach — saying, in essence: give us your data and get something in return.
The budgeting Web site Mint.com, for example, displays discount offers from cable companies or banks to users who reveal their personal financial data, including bank and credit card information. The clothing retailer Bluefly could send offers for sunglasses to consumers who disclose that they just bought a swimsuit. And location-based services like Foursquare and Gowalla ask users to volunteer their location in return for rewards like discounts on Pepsi drinks or Starbucks coffee.
These early efforts are predicated on a shift in the relationship between consumer and company. Influenced by consumers’ willingness to trade data online, the sites are pushing to see how much information people will turn over.
“People are a lot more willing to give away a lot of stuff as long as it results in some benefits that they value,” said Stephen J. Hoch, a marketing professor and director of the Jay H. Baker Retailing Initiative at the University of Pennsylvania’s Wharton School.
New companies including WeShop, Aprizi, Blippy and Dopplr are trying to exploit the data that people seem so willing to give up. Some are even allowing shoppers to set what terms they want — free shipping, half-price discounts, only fair-trade products. They can also list what they are shopping for, like a gray cashmere sweater under $100, for instance, and let the retailers fight it out for the right to make a sale.
“The whole privacy debate has grown up around people using your data without your permission,” said Antony Lee, chief executive of WeShop. “If you want to use your data to your benefit, that’s for you to do,” Mr. Lee said.
Daniel Sjoberg, a 26-year-old in Manhattan, signed up for Mint as he was completing graduate school in biostatistics last summer. He allowed the site to pull information from his checking account, his credit card and his student loan account.
He meant to use Mint as a budgeting tool, but soon began browsing through offers Mint listed under “ways to save.” He signed up for a Charles Schwab checking account when he learned it would refund his A.T.M. fees, and an Ally savings account based on the interest rate.
Sponsors are allowed to include their logo and a link to their site, and they pay a referral fee if a consumer signs up, but offers from nonsponsors are listed, too. Mr. Sjoberg said he particularly liked how transparent Mint seemed to be.
“They put that very clearly for you to see — ‘We think Ally is good for you, and by the way, they’re endorsing us,’ ” Mr. Sjoberg said. “It’s refreshing to have it out in the open who’s giving them money and who’s not giving them money.”
Aaron Patzer, who founded Mint in 2007 (the company was acquired by Intuit in 2009 for $170 million), believed that users would give the site private information in return for allowing Mint to analyze their finances to alert them when they had exceeded their budget, or to send them offers from cable companies or banks.
“Most venture capitalists, when I was starting this company, said that no one would trust a start-up with their financial information,” said Mr. Patzer, now vice president and general manager of Intuit’s personal finance group. “In essence, we would data-mine your own data in order to help you.”
While data on Mint is kept private — there is no way to share financial details with other users — WeShop has built a system that allows people to spread information about their shopping habits. After a consumer gives WeShop access to an e-mail account, the system scans e-mail headers to find electronic receipts, then extracts what someone bought and what price they paid.
All that information is posted to the WeShop site as a kind of in-depth shopping history. A consumer can keep it private, or share some or all purchase data with other people in WeShop networks (using a nickname). That lets users compare prices and post messages about what Lego sets or prom dresses they are considering.
WeShop will soon give retailers access to the data and allow them to send specific offers. A retailer like Bluefly, which says it plans to test WeShop, could search for people who have bought something prom-related, and send those users e-mail messages with special offers on formal dresses. Retailers pay WeShop a percentage of the sale price when a consumer buys a product.
“Everyone’s kind of working on different angles of how we give the consumer more ways to target what they want, to ask for what they want, and get it,” said Bradford Matson, chief marketing officer of Bluefly.com. “This notion of how people shop is changing very quickly.”
Bun Lai, a chef at Miya’s Sushi in New Haven, said he liked the way WeShop put him in charge. “I wasn’t completely comfortable right from the start — it’s after I understood that you actually have control of the information that you’re going to allow the network to have, then I realized it was actually something more empowering,” he said.
But the upfront dealmaking does not quiet all the privacy concerns.
“The big problem is that these business models are not very stable. Companies set out privacy policies, consumers disclose data, and then the action begins,” Marc Rotenberg, executive director of the advocacy group Electronic Privacy Information Center, said in an e-mail message. “The business model changes. The companies simply want the data, and the consumer benefit disappears.”
But Giff Constable, co-founder of Aprizi, a shopping start-up that asks users to enter information about preferences, then selects products for them from throughout the Web, said a changing business model was unlikely, and even if it happened, the consumer could easily disengage.
“It’s opt-in, and it’s understood from the beginning what’s going on here,” Mr. Constable said. “That level of control is explicit: you can plug in and you can remove the information that’s there.
“It’s a very simple bargain — it’s, ‘You share with me, and I am going to make your life better.’ It’s not about privacy versus lack of privacy — it really does come down to control and giving people choice.”
That, and a perceived benefit. “I wasn’t really concerned about giving them information,” said Mr. Sjoberg, the Mint user. “I was only considering the things I was getting out of it.”
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