Kudos to Assemblyman Richard L. Brodsky in the NY State Assembly for taking on GoogleClick and the rest of the back-end invisible online tracking services.

The NYT reports A Push to Limit the Tracking of Web Surfers’ Clicks:

AFTER reading about how Internet companies like Google, Microsoft and Yahoo collect information about people online and use it for targeted advertising, one New York assemblyman said there ought to be a law.

 

Michelle V. Agins/The New York Times

Assemblyman Richard L. Brodsky, the sponsor of a New York bill to limit how companies collect data on computer users.

So he drafted a bill, now gathering support in Albany, that would make it a crime — punishable by a fine to be determined — for certain Web companies to use personal information about consumers for advertising without their consent.

And because it would be extraordinarily difficult for the companies that collect such data to adhere to stricter rules for people in New York alone, these companies would probably have to adjust their rules everywhere, effectively turning the New York legislation into national law.

“Should these companies be able to sell or use what’s essentially private data without permission? The easy answer is absolutely not,” said the assemblyman who sponsored the bill, Richard L. Brodsky, a Democrat who has represented part of Westchester County since 1982.

…

“A law like this essentially takes some of the gold away from marketers,” said Joseph Turow, a professor at the Annenberg School for Communication at the University of Pennsylvania. “But it’s the right thing to do. Consumers have no idea how much information is being collected about them, and the advertising industry should have to deal with that.”

This is an absolute no brainer.

If you don’t have permission, don’t track users.

In the physical world, we have developed fairly robust rules of social etiquette and even laws regulating this sort of behavior. Can you imagine how creepy it would be if some stranger surreptitiously followed you around, noting where you go, what products you buy, even what sections in the supermarket you lingered in? Yech! Get that stalker away from me.

And yet, that is exactly what most (if not all) online ad networks do to maximize their ability to sell high margin ads targeting Internet users. It makes sense. If they can tell from your clickstream behavior that you are likely looking for a new car, then they can create a lot of value by showing you new car ads. Value for advertisers and value for you… after all, you ARE in the market for a new car, right?

When it works, it’s cool. But what about when you don’t want it working? When you want a little discretion as you window shop? When you’d like some privacy? Unfortunately, it doesn’t work that way. Users can’t tell when the ad networks are, or are not, tracking–it is all invisible to them–and there’s no equivalent of a “do not call list” to turn off such tracking.

The right answer is to move toward user-centric advertising, where the user is explicitly in control of all the data used to offer them ads and can even limit the types of ads shown. This resonates with Esther Dyson’s testimony to the Federal Trade Commission at their Townhall on behavioral targeting and her subsequent article at Huffington Post, where she proposed using a “Disclosure 2.0″ approach to this issue.

If advertisers and ad networks can create real value with behavioral tracking and targeting, then full disclosure–and even full user control–will only enhance trust and deepen the relationships between businesses and customers. The long term value of a customer depends on building viable, healthy relationships. Relationships depend on trust. By engaging openly and responsively with their customers–with full disclosure and as much user control as possible–companies can craft entirely new, more trusting and more profitable relationships while customers feel more comfortable about their personal boundaries, have increased confidence in their vendors, and get easier access to better products and services.

Advertisers need to get this. Ad networks and search engines need to support it. And it may be that regulators need to enforce it.

[This is precisely the sort of payoff for vendors that Project VRM is working towards.]

Microsoft Research recently revealed a new interface, called SearchBar, for tracking Complex Searches. It’s pretty cool. The video is a must see for anyone interested in next-generation search. And the PDF is solid detail well worth the read. [You might also want to see their other Search UI innovations.]

The new SearchBar addresses a lot of the needs I’ve been talking about for Complex Searches, although with some slight variations and a few key missing ingredients, which I’ll be talking about soon. (Hint: it’s not quite a user-centric Search solution.)

What’s great about SearchBar is how thoroughly Microsoft has investigated the value of managing Complex Searches explicitly. Although the simplicity of the Google-style keyword search has empowered a generation of people to find what they need online, it essentially breaks down for Searches that pass a certain threshold of complexity. Searches that take us to multiple search providers and last more than a few minutes, even days or weeks, are essentially managed in whatever ad-hoc way we can find: we keep it in our heads, open in new tabs, cut & paste into Word, bookmark, print to PDF, whatever works.

One of the hard questions we’ve been facing at SwitchBook is how can we simplify that complexity enough so Mom & Grandma will be able to use our software. This is particularly challenging in light of data from Jacob Neilson showing that for a shockingly high percentage of people, just getting to Google is hard. Read that again. In a recent study, 24% of “above average” Internet users failed to reach Google despite a stated desire to do so.

That seems crazy to those of us who earn our living online in some fashion, but this is the crazy truth of the mainstream Internet user. These are the folks who turn a blogosphere buzz into a $200 million acquisition or billion dollar IPO. Folks need it simple. No, even simpler than that. Nope. Think again. EVEN SIMPLER. 24% couldn’t get to Google. Amazing.

So, we can build a solution for Complex Searches. We can provide software with a great interface that does all sorts of amazing things. But how, oh how, do we remove the complexity so that the average Grandma can use it?

Well, that’s the $640 million question. I like the work Microsoft has done so far. Much better than anything from Google in this area. Even better, they published the results of their user testing. It is excellent validation that smarter tools improve search efficiency for Complex Search. Read the paper when you get a chance.

It is truly groundbreaking research, even if the technology is straightforward. I look forward to it translating to groundbreaking consumer education. After all, it was only a few years ago that Internet email and Microsoft Word seemed impossibly complex for Mom & Grandma. Today, we’ve both simplified the tools and educated users enough for both of those applications to pass into mainstream use. As far as I’m concerned, every dollar Microsoft spends educating the public about the value of Complex Search tools, the easier it will be for people to understand the SwitchBook value proposition.

Excellent chat today by Steve Gillmor, Chris Saad, Mary Hodder, Karoli Kuns, Robert W. Anderson, Matt Terenzio, and Bruce Lerner about data portability. They get to the nitty gritty about data portability, licensing, and social networks. Perhaps the best Gang I’ve ever heard.

So, Steve, if you’re listening, take this to the next level and talk about service portability.

It’s great to be able to move my data from service to service. Data portability is a good thing–and we absolutely must address the licensing and privacy issues that cloud that horizon. We also need to be able to move our services from provider to provider.

We can do that today with domain names that we own. We can move our blog or our website or our email from one hosting provider to another. The next step is to extend that to user-controlled services that expose data on our terms, under our control.

Data portability lets everyone pass data around so different service providers can do smart things with that data. Ok. But we learned long ago that software systems are more robust, more scalable, and more maintainable when rather than exposing the data, you expose functions that use that data.

I don’t want people who email me to have direct access to my email data file a server somewhere. That would be insane. I want them to have a well-defined, constrained, complete service interface for sending me email, no matter which service provider I choose. An interface that lets them reach me, but keeps them from reading and deleting other email.

Similarly, we need to take user data, place it in a personal datastore (yea! portability!), then provide specific, well-defined access services to third party service providers, using that data, where the user controls those services completely: what services are available, who can access them, and even who the underlying service host is. This is how email works. How websites and blogs work. Next is to take this to user-centric services with complete, seamless data and service portability across the entire cloud.

We know that we need to be able to move our email service from one service provider to another. We know that we need to be able to move our websites to the host of our choice. We know that we need to be able to move our cell phone number from one carrier to another. And we know that we need to be able to change our attorney of record, our doctor, our insurance provider, etc.

We also need to be able to move our MySpace profile and Facebook page anywhere, anytime, on our terms… not just the friends list, but the entire visual gestalt. We need to be able to move our IM and our Twitter services. We need to be able to move our search history from one search provider to another. Pick any service you have come to depend on and understand that dependence creates the need for liberation, the need to get that service on your terms with the provider you prefer, under your complete control.

Without complete portability–services and data portability–innovative service providers will corner markets with data silos and service lock in. Only with transparent, seamless portability, can we leverage the open market and open network to drive to the most desirable and most useful services.

The user-centric identity community is way ahead of the curve on this one, and I’m looking forward to the data portability movement re-discovering the architectural realizations learned the hard way by OpenID, CardSpace, Liberty Alliance, and Higgins, just as the identity community begins to extend from the hard core technology built for identity and starts working towards the applications that will connect ultimately to real value for real users. And it has all been learned and continues to be built through collaborative efforts toward real portability and interoperability at the heart of the infrastructure. In particular, XDI has made great progress hashing out exactly the sort of licensed-based identity-authorized data access that Steve talked about in the podcast. ProjectVRM is driving a user-centric approach to commerce in this conversation and I encourage folks to join us all at the next IIW unconference and to keep an eye open for a VRM workshop sometime later in the year.

For those of you who are curious about Powerset’s natural language search, here is an excellent, in-depth presentation (~1 hour 10 min) at the 2007 International Semantic Web Conference by founder & CTO Barney Pell.

Worth watching if next-generation search is on your radar.

Charitable giving has an intriguing relationship with rational pricing theories. The supply of charitable products is essentially inexhaustible. Price of a charitable gift is not based on supply and demand, with curves meeting at an efficient clearing price.

And yet, there is a competitive marketplace connecting patrons and charities. From schools and radio stations to global conservation and intervention, millions of charities compete for attention and dollars.

In my last post, I argued that markets are about more than prices. So too is the world of charities. Today the NYT reports on current research by John List and Dean Karlan investigating how and why people give, and what makes them give more or less to a particular cause at a particular time. A good read.

The research highlights several unique influences on charitable giving, with many lessons about which conversations matter most.

In particular, people give for that “warm glow” rather than for any perceived material return. Perhaps that isn’t a surprise, but when connected to economics it changes the conversation. It turns out that matching donations, from employers for example, are valued more as a social trigger than as an economic motivator. People give until the trigger is reached–until they’ve met the socially determined mark for making a difference–and they don’t give more just because a match is a greater multiplier, even though economic theory would suggest the greater multiplier would create more giving.

So one of the questions for charities is how then do you maximize the warm glow and the amount of giving it triggers? And not suprisingly, ROI calculations and traditional economics have little to do with it.

At Project VRM, we’ve talked a lot about how markets are more than transactions, more than just prices. Markets are conversations and relationships. That makes much of List & Karlan’s research applicable to all of VRM, and especially for Doc Searls‘ efforts to reinvent our relationship with Public Radio.

Radiohead and Nine-Inch-Nails have already broken ground with commercial Pay-What-You-Want product launches, which is in practice a lot like the Public Radio mantra that turns 10% of listeners into subscribers every year. Both bands’ efforts were huge successes as promotions, although the jury is still out on the longer term impact. (It should be noted that Nine Inch Nails was more of a “freemium” model as they offered limited editions and additional tracks for a fee.)

As digital products become “free” to distribute, it may be that artists can generate more interest, greater goodwill, and greater profit, by thinking more like charities and less like lawsuit-wielding rabid dinosaur music studios. In which case, it behooves them to read up on List & Karlan’s research.

And apropos for VRM, it behooves us to do so as well.

Economists often talk of markets as price discovery mechanisms, and the freer the market, the more efficiently those prices can be discovered. In fact, in the absence of all transaction costs, free markets assure the efficient allocation of resources, regardless of initial distribution—that’s the core tenet of Law & Economics as proven by Coase ’60. Of course, we can’t ever actually get rid of transaction costs completely, but that’s ok. The lower they go, the more efficient the market, the better the overall utility of the economy.

But let’s not confuse making markets more efficient with making everything about pricing. Only in the simplest commodity markets is pricing ever the sole factor. Whether you focus on relationships and conversations or the 20^th century model of brand-driven differentiation, there are lots of factors that influence a transaction at least as much, if not more, than price.

I think it makes more sense to think of markets as “value” discovery mechanisms. It just happens that the industrial age conflated price and value, so the distinction was often ignored. When we have efficient markets, everyone has the simplest, fastest way to find the highest value we can, including price, quality, aspirational expressions, relationships, and moral or ethical congruence (such as being “green” or animal friendly).

So, there are at least two distinct ways VRM can help reinvent the market. First is providing a more efficient value discovery mechanism, in part by reducing transaction costs. That is, helping us find the good stuff more easily, more quickly, and more cheaply. Second is by helping to define new avenues for creating value, through richer, more meaningful relationships, better service, and greater customization in product and service offerings.

One particular false hope for VRM that I don’t want us to get distracted by is the illusion that by moving power from Vendors to Customers we can force better prices. That’s a win-lose game that is actually wasting resources trying to shift the line of marginal value towards the individual. It doesn’t result in any new value in the system and yet it increases transaction costs. This is clearly a net loss for the overall economy.

A related architecture with a much more satisfying win-win outcome is aggregating users to define & document demand in order to encourage vendors to fulfill that demand. This isn’t about market power, it is about market validation.

Eventful’s Demand service does this by letting people state their interest in having a particular event in their neighborhood. Like a petition, this demand is aggregated and presented to the event organizer to get them to actually bring the event to locations with the most demand. This not only helps bring the product to the individual, it helps the performers understand and meet market demand. This type of demand discovery actually creates value. There is more profit for the performers—or they wouldn’t bother doing the extra show—and end users get to go to an event they otherwise may have missed. This is such a VRM-style win-win that I have asked the founder of Eventful to join the conversation.

I’m looking forward to seeing how we might build on Eventful’s approach.

I used to carry a small notebook (~2″x3″) with an equally small pen and would jokingly refer to it as my non-digital PDA whenever I took it out in front of fellow digerati. I mostly kept track of to-do items, shopping lists, and inspirations, just stuff.

Forward to 2008 and enter PocketMod. Mash up your design, print, fold, cut, fold some more. Instant paper PDA. Nicely done and just enough fun to try out.

Tip of the hat to Peter Duke.