A few days ago I covered a news story about a pending lawsuit against Apple and how some big name apps like Pandora sell personal user information to third party ad networks. Instead of just repeating the news story, I would like to analyze some of the ramifications that go along with using apps that contain your personal information and whether it is acceptable and necessary for app-makers to sell information in order to make the finances work out for their companies.
For music services specifically, it is hard to create a profitable business even if you are as big a name as Pandora. Former CEO and founder of MP3.com Michael Robertson did a guest post on the popular tech blog TechCrunch in which he described Pandora’s financial situation for the 2010 year. One interesting tidbit, and possibly sobering piece of information, is that “the per user royalty rates Pandora has agreed to pay will go up 10% per year for the next 4 years,” making it tough for Pandora to hit and sustain breakeven or profitability in the coming years.
While I do not know all the financial particulars of all the various companies selling personal consumer information to third party ad networks, because there are many, I think it is safe to say that many of these companies need that extra money to help make their budget balance (or at least be less in the red). So the conclusion that consumers need to think about is whether their apps are worth the extra loss in privacy; that is to say, in order to keep their favorite services running, people have to give up a little bit on their end. We give up our privacy when we have our bags checked at the airport or we cross the border into another country, but this behind-closed-doors selling of our personal information is more subtle, and for some, it borders on nefarious.
As consumers we can easily say we do not want our personal data compromised, but it is a whole other story when it comes down to sacrificing convenience and pleasure. If you took away all the capabilities of companies to store and use your information in ways they see fit, then it might also stop you from getting the best recommendations for products and services you are looking for – personalization would be much harder and you would have to go through a lot more legal hoops to set everything up as fast as you can now with your online networks.
Personally, I usually opt for convenience over privacy, but that is probably because I am not a very private person with specific things I want to keep hidden. However, some people in some circumstances have reasonable needs for privacy in everything they do online (even those not using the Internet for “sketchy” purposes). Just because I want my convenience – sometimes at the expense of my privacy – that does not mean others are not entitled to the full extent of their privacy. It is not a clear-cut case of right and wrong and in the future there will hopefully be more concrete opt-in and opt-out policies online to maintain consumer privacy and security.