By Dr. Alan F. Westin

A sharp debate is raging over individuals giving personal information on the Internet in exchange for various benefits. Resolution of this controversy could have profound effects on how we structure online privacy choices and the future shape of e-commerce as a service-delivery system.

The Information-for-Benefits Advocates
On one side of the current furor are companies on the Web promoting what they see as a vital step in developing effective and responsive e-commerce. Net users are asked to provide information about their consumer interests and demographics, or to allow data about their site visits to be collected for statistical analysis. This is used to study viewing patterns, measure purchasing activity or present ads tailored to participants.

In return, Net users are offered a variety of “freebies” — free e-mail, free Home Pages, product discounts, sweepstakes opportunities, even a free PC. And, literally millions of Net users have chosen to participate in such information-for-rewards programs on the Net. “This is the kind of fair information exchange that will enormously enrich and enhance e-commerce,” these companies assert.

The Maximal-Privacy Advocates
On the other side of the debate, fiercely arrayed, are some privacy advocates who denounce information-for-benefits programs as a dangerous threat to online privacy — what one critic calls a “Faustian bargain.” These critics warn that highly personal profiles could be created by these information-supply programs and that this information could be passed along to other companies, used for “unwanted” e-marketing and even seized by government investigators.

“Don't sell your privacy for some cheap benefit!” and “Stamp out seductive information capture” are the passionate messages these critics are sending to Net users.

What 86 Million Net Users Think
So just how do the 86 million over-18 U.S. Net users in early 1999 react to this controversy, which is playing out almost weekly in news reports about the latest information-for-benefits program?

A national survey of Net users was conducted in February by Opinion Research Corporation (ORC) for Privacy & American Business. (For survey details and the Net User Profile, see the box below.)

The top-line result of the survey is both clear and decisive:

Privacy advocates are speaking for 12% of the adult Net user population – folks who see any provision of personal information or clickstream records to infomediaries or consumer-preference marketing websites as absolutely wrong.

86% of Net users think just the opposite — that individuals should be able to make informed choices on whether or not to give their personal information in these settings. Almost nine out of ten Net users reject the idea that such actions constitute a careless relinquishment of privacy by individuals or a threat to creating a good privacy environment on the Net.

How We Framed the Issues
The P&AB Survey described information-for-benefits programs and asked respondents how fair they felt these were when three specific uses were applied to the information collected.

“Some websites offer Net users a valuable benefit — such as free e-mail, a free website, special discounts on products, or even a free PC – if the person will agree to provide some personal information in return. If the website informs individuals fully about what will be done with this personal information, do you think it is fair or not fair for EACH of the following things to be required, in return for the benefit?”

Of the three use-situations posed, between 6 and 9 of ten Net users feel the information uses are fair:

" 87% of Net users feel it is fair to collect information about “consumer interests and preferences and information will be used for statistical analysis of interest and buying trends among Net users.”

" 79% feel it is fair for persons receiving the benefits to agree that “banner-type ads for products and services can appear on the PC they are given, or at the Web site they visit to receive the free service.”

" 59% feel it is fair for persons getting the benefit to agree that their “e-mail address can be provided to reputable companies, so they can send offers of products or services that reflect that person's particular interests.”

Note that the question said that the site would inform individuals fully about what would be done with the personal information. In January and February of 1999, before framing the question, P&AB staff examined 50 of the leading websites offering a range of benefits in exchange for information. All but two provided clear information-use explanations.

The Key Privacy Question Posed
We presented the central policy issue described in the beginning of this article, in the following language:

“Some people believe it is wrong for companies on the Net to ask individuals to give personal information or watch ads in return for a benefit, on the ground that this leads people to 'give up their privacy.' Others say it is right to let each individual decide whether they want to provide information for uses that are fully explained, in return for benefits. Which view do you agree with most — that participation in these programs violates privacy or that this is a matter for individual privacy choices?”

As noted, 86% believe participation in information-for-benefits programs is a matter for individual privacy choice and 12% think participating in these programs violates privacy.

Who Would Want to Participate In Such Programs
Clearly, participating in these programs is not something that every Net user will rush to do. Most already have a PC, an e-mail service, a Home Page (if they want to maintain one), and there are plenty of websites that Net users already surf for products and services that interest them.

It was a little surprising, therefore, that a majority of Net users (53%) said it was possible that they “might participate at some time in this kind of Internet program that exchanges benefits for information, with full explanation of how the information would be used.” (22% said this was “quite possible” and 31% that is was “somewhat possible.” This represents approximately 46 million potential participants.)

Not surprisingly, it was younger Netizens that were even more interested than the total user majority in participating in such programs.

How Important Are Privacy Policies for Such Programs
Of course, in the larger privacy debates, informing individuals about information uses is only half of the good-practices formula. The other half is providing opt-outs or tailored choices that allow users to accept some uses as fair but to decline other uses that they feel are not acceptable.

We tested Net user attitudes on that aspect as follows:

“In deciding whether you would join such a program, would it matter to you whether the website follows the kind of privacy policies recommended by online industry associations, or would you just not be concerned with how your personal information was used for marketing purposes, as long as you got the valuable benefit that was being offered?”

A resounding 82% of adult Net users said “ having privacy policies would matter.” Only 14% said these would not be important as long as they got the benefit.

This confirms what literally dozens of Net user surveys over the past 2-3 years have found — privacy policies DO MATTER when individuals are asked to give personal information at websites.

Overall Analysis of Survey Results
When you look at the population of Net users who say that participating in information-for-benefits programs violates privacy (12%) along with those that say having privacy policies would not matter (14%), there are only 5 people (or 1% of the sample) who subscribe to both views.

These P&AB survey results can be applied to the privacy group-segmentation formulated in prior Harris-Westin surveys analyzing offline privacy attitudes.

" Here, 11% of Net users fit the Harris-Westin “Privacy Fundamentalist” profile. They feel that giving their personal information for benefits, even if informed of its uses, would violate their individual privacy boundaries. Privacy advocates speak for this segment of the Net population, and their wishes clearly should be respected. They should neither be forced nor duped into participating in an information-for-benefits program.

" At the other pole, 13% of Net users essentially say, “inform me what will be done with my information, and if I like the benefit and am not offended by the use, I'll join. I don't really care, in this marketing context, whether the Web site has privacy policies favored by industry or the privacy advocates.” These are the folks that Harris-Westin Surveys have called the “Privacy Unconcerned.”

" In between — ever the Golden Mean — are what Harris-Westin typology calls the “Privacy Pragmatists.” Three out of four adult Net users (75%, representing 64 million adults) say, in this online situation, they want it all — notice, benefits and good privacy policies.

The good news for both responsible e-businesses and privacy advocates alike is that three out of four Netizens are ready to join a key component of the e-commerce marketing model - consensual or permission marketing - if business websites do it the right way.

Demographic Profile of Net Users

Fieldwork: Conducted by Opinion Research Corporation, February 11-14, 1999

Survey Sample: 1,014 adults 18 and over

Net User Sample: 457 adults 18 and over

Confidence Factor: +/-5