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The Monetization of Privacy – Birth of a “Trust Economy”

Trust will be the most highly valued currency in a globally connected world. Those companies that earn their customers trust will be able to add significant value and at the same time monetize the data. It won’t be easy to accomplish but it all starts with understanding who owns the data.

The Facebook IPO finally happened last week and so did a new era for all Internet companies and the topic of privacy.  Facebook and others will have to increase their focus on growing their revenues to meet street expectations, and in the process, they will have to continue to innovate and monetize user information.   The concept of collecting and selling user information is not new, and as a matter of fact, retail stores like supermarkets have been doing this for years.  Every time you use your supermarket loyalty card, you are trading off privacy for coupons and discounts. As the article below points out, companies that collect information from places like supermarkets know about your religion, what books you read, how much education you have, your income and even your health condition, based on your supermarket shopping habits.  Literally, to buy adult diapers, you can be marked by these consumer information collection groups as someone who has a bladder-control problem.

Data collection lucrative for supermarkets
Data collection lucrative for supermarkets. Stores with shopper cards can make money selling information. Published: 02/06/2002 at 1:00…

The privacy concerns get even more unnerving when you aggregate and analyze personal user information like search, location, friends, tweets, Facebook posts, call records and purchases.  Sophisticated algorithms can determine things about us that are much more intrusive than our bladder control problem.  Both Facebook and Google have been in the news in the past as online privacy issues jump to the forefront of consumer concerns.

Privacy concerns: Google, Facebook face backlash for how they …
Feb 22, 2012 … Online privacy issues jumped to the forefront Wednesday in Maryland as the attorney general challenged Google Inc.’…

Have Facebook Avoided Privacy Backlash Or Is There More To …
Jan 11, 2012 … Facebook have traditionally always faced huge backlash when launching new products and features on the site. Users don…

Technology will always challenge the judicial system by creating new and never imagined scenarios that impact society.  The advent of our hyper-connected global economy will elevate the issue of privacy at an ever-increasing rate.  So what is the currency in this new privacy centric economy?  Well the answer my friends is trust.   We are rapidly moving to a “Trust Economy” and those companies that have earned the trust of their users and customers will be able to monetize those relationships.  Those that violate and abuse trust will suffer severely with an ever increasing backlash from users and government.

So what is the current environment?  I can share with you a personal experience on how privacy is being handled.   In November, a story broke on how mobile carriers were selling customer information to third parties.  Although, they are not disclosing name, address or telephone numbers, they are getting paid for information on me.   I’m sure that they cover what they are doing in their lengthy and complex terms and conditions that no one reads but I wasn’t aware they were doing this.  I felt cheated and my trust of my provider went down significantly.  I subsequently plowed through a number of web pages online and finally was able to opt out …but it wasn’t easy.  This kind of behavior and lack of transparency will eventually impact them significantly as they try to build SoLoMo (Social, Location and Mobile) services that could add significant value to the user and be turned into big $$$$ by the carriers.

So what should companies that are monetizing user information do?   For starters, if we are moving toward a “Trust Economy”, it would make a lot of sense that all companies begin the process of implementing a strategy to win the trust of its users.  This could be attained by the following:

  1. Be transparent -- be upfront and tell people what you are doing.
  2. Don’t bury privacy issues in long and lengthy T&Cs that no one reads.
  3. Explain what you are disclosing and how it doesn’t violate any privacy concerns.
  4. Give them an easy way to opt out should they want to. (You should have a value proposition for them to opt in- go to #5)
  5. Share the revenue with them by providing them incentives to opt in. Cheaper monthly service or add significant value to a service
  6. Create service that have benefits to the user. Need to create value for the use of information. SoLoMo is a good example of combining location-based service with social and mobile services. These services can add significant value to users, who might be willing to give up a level of privacy.
  7. Provide training and easy ways for them to configure their privacy settings.
  8. Don’t violate their trust …ever.

My prediction is that Facebook and others that rely on monetizing user information will be challenged in the future unless they rapidly revamp their strategies to gain user trust.  I don’t believe that the journey will be easy but those that can navigate through the complexity and win the hearts and trust of their users will see increasing profits.  Those that stumble and lose the faith of the user base will be another statistic.

What do you think?  Please let me know.

Most users distrust Facebook, poll shows | Dallas Fort Worth …
3 days ago … Some 900 million people around the world are users. But many of them don’t have a very high opinion of Facebook or t…

Facebook poll finds user distrust apathy- MSN Money
By Jesse Bergman and Kayla Tausche. CNBC Facebook’s public offering will be the largest and perhaps most highly anticipated Interne…

Poll shows most users distrust Facebook -- Digg
5 days ago … Facebook’s public offering will be the largest and perhaps most highly anticipated Internet deal in history. But face…

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2 Comments.


  1. Carlos, I think almost every large corporation has a long way to go on the trust issue – not only with their customers, but with their employees too!

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  2. Gaining the trust of users is critical in any business platform. It seems that some internet companies feel hidden behind the fact they are not meeting face to face with individual people. Every business should handle customer information in the same way as the local hardware store. Assume that the customers are those people you see every day at the grocery store, ball games, school, etc. and be ready to look them in the eye knowing you have their trust.

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