Amazon.com Lists Stir Privacy Concerns
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From: Peter Langston <psl>
Date: Fri, 27 Aug 99 09:46:50 -0700
Subject: Amazon.com Lists Stir Privacy Concerns
Forwarded-by: Mary Ellen Zurko
Amazon.com Lists Stir Privacy Concerns
By David Streitfeld
Washington Post Staff Writer
Friday, August 27, 1999; Page A1
"The Microsoft File: The Secret Case Against Bill Gates" is a bestseller
among Microsoft employees. At MCI WorldCom, they're buying "The Electronic
Day Trader." At the Library of Congress, "Gary Null's Ultimate Anti-Aging
Program" is a hit. And at National Semiconductor, it's not just circuits:
"101 Nights of Grrreat Sex" is on the company's Top 10 list. All of this
information is revealed by the online bookseller Amazon.com, which has
started featuring thousands of individual bestseller lists calculated by
Zip codes, workplaces and colleges -- wherever its customers are ordering
from. With a simple mouse click on the company's World Wide Web site, you
can peek behind the scenes at the books that specific groups are reading as
well as the compact discs they're listening to and the videos they're
Amazon describes it as "fun" -- and happily announced the feature in a press
release last week that was followed by a number of media reports. Late
yesterday, however, citing complaints from customers, the company began
backtracking. Customers can now opt out of having their data collected, as
long as they're savvy enough to read the fine print and send an e-mail to
the company. By sending a fax, companies can also choose not to be included.
If you work for the Federal Deposit Insurance Corp. and want to buy a copy
of the CD "Zoot Suit Riot: The Swingin' Hits of the Cherry Poppin' Daddies"
-- and apparently many employees there do -- you will no longer have it
chalked up statistically for all the world to see.
The episode underscored again the power of Web technology to collect vast
detail about the likes, dislikes and buying habits of millions of consumers
and zoom in on the data in ways unprecedented in the annals of marketing.
"We're taking chances, we're innovating here," said Amazon spokesman Paul
Capelli. "This program is building community and adding a unique feature
that never could have existed before the Internet."
The chief executive of the trade group to which Amazon belongs, the American
Booksellers Association, had a different view. "This is outrageous," said
Avin Mark Domnitz. "One of the things that people are afraid of with
computers is that they are so powerful, [that] they collect extraordinary
amounts of information about individuals. We could create an environment
where people are afraid to go online."
Domnitz's remarks were echoed by leading independent booksellers, who never
were among Amazon's great fans. "It's just one more step along the road to
a complete loss of privacy for consumers," said Bill Petrocelli of Book
Passage in Corte Madera, Calif.
Andy Ross of Cody's, a large Berkeley store, said: "It's like 1984 has
arrived. What people are reading, thinking about, the ideas they're working
with, should be completely confidential, but with Amazon they're not."
No one interviewed yesterday was particularly bothered by Amazon compiling
lists by individual Zip codes -- that's just a more specialized version of
the national and regional lists that have been a feature of the book trade
for decades. The concern was instead over the hundreds of lists specific to
individual corporations, colleges and universities, and a sprinkling of
nonprofit groups and government institutions.
"You can't say there isn't a privacy invasion here," said Robert Biggerstaff
of the National Association Mandating Equitable Databases, a consumer group.
"It's not traced back to the individual, but they are invading the privacy
of the company.
"It's unfair to the company to identify their employees as having these
particular reading tastes, and it's risky for the employees, who might be
buying a book that causes them to receive scrutiny from their employer,"
Sophisticated software that remembers and correlates such specific customer
information as Zip code, e-mail address, subjects searched for, purchases
made for oneself and purchases for others -- essentially every move you make
on a Web site -- is what permits Amazon and other Internet companies to
engage in what is known as "data mining."
The Internet commerce industry generally sees it as the road to greater
personalization in marketing -- in the interest of both buyer and seller.
Amazon said its point in publishing the lists, besides "fun," is to help
consumers buy more books and tapes. "If you realize that everyone around
you is buying a certain book or CD, you might think, 'Maybe I'll get this
too,'" said Capelli.
Or, he added, if your niece is going to New York University and you didn't
know what book to give her, you could look at the list of NYU bestsellers
and get her, say, "Mergers, Acquisitions and Corporate Restructurings."
Critics, though, see it as the road to trouble. "We have to be extremely
concerned where this is going to lead," said Judith Krug, director of the
Office for Intellectual Freedom of the American Library Association.
Donna Hoffman, co-director of the electronic-commerce center at Vanderbilt
University, agreed: "It could get pretty scary, depending on where you live,
work and go to school. These lists might begin to define interests most
people would prefer to keep private," such as, for instance, sexual tastes.
The Amazon program, called Purchase Circles, is "a clever tool, but it has
very dark privacy implications," Hoffman said. "If I come up with better
tools to attract you to my Web site, I can learn more about you. The more
I can personalize my site for you, the more I can customize my offering,
the more interesting it will be to you. Amazon is showing the power of
mining the database."
Mining the database of its 10 million customers is where many observers
believe Amazon is headed. Since it's so easy to compare prices on the Web,
many consumer goods are sold near or at cost. Instead of making a profit,
e-commerce companies are concentrating now on serving as many customers as
possible. The money, they believe, will come later, when they can be
full-service destinations for all shopping needs.
Amazon recently reworked its Web site so customers looking for new books by
any particular author are also told what is available by him at the firm's
auction and video sites. If you order a dog-care book, they try to sell you
The combinations are infinite, and so is the amount of money that can be
made. It's why Amazon, which has never made a profit and shows no sign of
doing so in the immediate future, is a Wall Street darling.
How happily consumers will come along for the ride is still undecided.
"Amazon is really pushing the envelope here," said Vanderbilt's Hoffman.
"It would be hard to find a consumer that didn't think this new idea was
cute and entertaining. But consumers are also going to say, 'I didn't know
they were doing that with my data. I didn't even know I gave them permission
to do that.' This raises the awareness of the privacy issue much higher."
Whether Amazon intended to do that is another matter.
"One of the big question marks surrounding electronic commerce is privacy,
and the lack of confidence that many potential customers have about
transacting [business] online," said David Sobel, general counsel of the
Electronic Privacy Information Center.
"It doesn't seem like a good business decision to do something that
highlights your collection of customer profiles," he added. "It throws fuel
on the fire."
Amazon's slight change of heart yesterday may help to quell a few of the
privacy fears, but it also will render the bestseller lists largely useless,
because readers will never know what percentage of book buyers at a company
or college have opted out. Amazon spokesman Capelli conceded that the
surveys are "not scientifically valid."
Many of the books, CDs and videotapes that are popular at a company or
institution are the same ones that everyone everywhere is buying. But some
reveal the particular tastes of the groups involved.
For example, while the impeachment of President Clinton might be a receding
memory everywhere else in America, Senate staffers are still buying Chief
Justice William H. Rehnquist's "Grand Inquests: The Historic Impeachments
of Justice Samuel Chase and President Andrew Johnson." At No. 5, it's
outselling Bob Woodward's "Shadow," a much more recent political book that
is a much bigger seller nationally.
Similarly, it might come as a surprise to some that the most popular
musician among customers from the military is ethereal mystic Loreena
McKennitt, whose CDs hold the No. 1 and No. 3 spots.
Companies and institutions contacted about their Amazon bestseller lists
declined to comment. The exception was National Semiconductor, where
spokesman Bill Callahan said the popularity of a sex manual didn't mean it
was a particularly swinging place.
"I've noticed nothing, and I've been here 15 years," said Callahan. "This
has always seemed like a pretty typical run-of-the-mill high-tech company."
(c) 1999 The Washington Post Company
© 1999 Peter Langston