Pandora’s out of the box
So, 9 Blog posts later and I think 2 key themes that I have noticed and found to be most interesting are the power of social media and digital privacy problems. After reading a few online articles I came across a recent case study on ‘Pandora Radio’ to help explain the future regulation of digital privacy and its effects and social media.
Pandora Radio is the free personalised radio which allows you to stream music on your iPhone or iPad. By choosing the name of one of your favourite artists or songs, Pandora will automatically create a “station” that plays that artists music and more just like it. It’s a great way to listen to the music you love whilst exploring new ones. However, Pandora Radio’s free app has been found to be supplying advertisers with huge amounts of user information by tracking users’ age, sex, ID, zip code and precise geographic location, which in many cases was updated in a continuous loop. It’s funny that just a few weeks ago in a previous blog post; ‘They’re watching you’, I was talking about how ‘brands have the responsibility to protect consumers’ privacy, and perhaps we should see governments intervene in regulating the use of consumer data’, and then we see the Pandora app story across our internet news screens.
It turns out that Pandora appears to be integrated with a number of advertising libraries including; AdMarvel, AdMob, comScore, Google.Ads, and Medialets. What this means is that consumers personal information is being transmitted to advertising agencies in mass quantities. This behaviour is most probably happening elsewhere and will continue to happen until application developers are given strict privacy regulations. The information gathered makes it very easy to determine who someone is, what they do for a living, who they associate with, and any number of other traits about them. I am on social networking sites and know about targeted advertising and cookies, but when this quantity of consumer data is being collected to the extent that your geographical location can be found; it’s no different to stalking.
A federal grand jury is investigating smartphone privacy, and legal experts said, “in general, companies rarely end up being charged with a crime. Companies in the federal government’s cross hairs often reach non-prosecution or deferred-prosecution agreements that allow the targets to avoid being criminally charged. In exchange, the companies may agree to concessions, including monetary payments or promising not to engage in future wrongdoing, among other things.” However, makers of apps could also face complaints of unfair and deceptive trade practices from the Federal Trade Commission. Such complaints can be aimed at companies that fail to tell customers how they are collecting information or are violating their own terms of service. “Hopefully this will bring about a big change in the industry and make companies be more responsible in what data is being collected,” said Ginger McCall, assistant director at Electronic Privacy Information Center.
Companies and Advertisers currently are tracking consumers information without any sort of permission or regulation. It is obvious that an intervention is needed, but what is still unclear are the details of how any ‘Do-Not-Track’ mechanism would work without disrupting the speed and ease of internet browsing. “Greater transparency is needed regarding the reliability, track record, and operation of government and commercial data mining systems. In addition, questions remain about the extension of consensus safeguards around government data mining to commercial data mining, the extent and speed of adfunded web services’ adoption of identity management systems, and the broader social impact of greater online anonymity.” (Rubinstein, Lee, and Schwartz, 2008) In late 2010 cnet News said, “The most obvious approach is for people to configure their Web browsers through a cookie to flag themselves as opting out from behavioural advertising. But that requires cooperation among browser makers and advertisers, and without a law enforcing compliance, web sites could presumably ignore the please-don’t-track requests.”
Firms that are ‘Green’ and Socially responsible are often seen to be more desirable. If other firms (like Pandora) start, or continue to exploit consumers private information they may see a backlash against them. This could cause a negative impact on a firms brand image as well as a drop in consumers using their services. The impact would be far greater if their reasons are due to anger and fear of exploitation rather than a simple disinterest or dislike for the brand. As I have mentioned on previous blog posts, the online masses work as a long tail, and negative conversation online can be driven very fast. “Perceptions of unfairness are likely to lead to a variety of negative behaviours that ﬁrms’ cannot afford to ignore. Firms need to be proactive in developing their privacy policies. Not only are consumers becoming increasingly aware of online privacy breaches but they are also better equipped to prevent privacy intrusions and retaliate against ﬁrms that are perceived to have acted inappropriately.” (Ashworth and Free, 2006)
To conclude, brands do have the responsibility to protect consumers’ privacy. Protecting customers, being truthful, and fulfilling their promises is the best way to improve brand image and build lasting relationships with consumers. Exploiting them for their personal information to gain an advantage over competitors is wrong, and in the long-term, ineffective. Governments need to intervene in the regulation of consumer data usage with more serious consequences. Technology is moving forward at a very fast rate, and it is important for regulations to keep up to ensure the consumer is protected.