How Making Your Website Safer Could Also Make You Money

Vidoop Software Heightens Publishers' Log-in Security While Providing Prime Space for Product Placement

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NEW YORK (AdAge.com) -- Even as technology companies such as AOL, eBay, MySpace and Yahoo struggle to effectively monetize the millions of click-throughs and fee-less transactions that take place daily deep inside their vast consumer websites through social networking, file sharing or free internet phone calls, a one-and-a-half-year-old start-up called Vidoop has figured out how to make money off an unlikely web transaction: that annoying log-in.
Vidoop co-founder Luke Sontag
Vidoop co-founder Luke Sontag

Engineers at Vidoop's 30-person shop in Tulsa, Okla. -- long an important outpost for security technology serving the U.S. Navy -- have developed some clever software that dispenses with the ubiquitous yet cumbersome user-name-and-password log-in method. They've replaced it with a process of recognizing images on an ever-changing grid of digital photos displayed on the screen.

And here's the Google-ish part: Vidoop monetizes the process by selling the images in the grid to advertisers for product placement. So instead of seeing a generic car on the image grid, consumers might see a Ford Mustang, a can of Coke or a Budweiser.

Giving and sharing
It sounds simple, but it has a big potential impact. Through one of its business models, Vidoop plans to give its software away for free and then share revenue from the ad sales with its clients. For the first time, this could actually give companies an incentive to improve the security on their corporate websites -- something most have been loathe to do, since internet security is costly and because most any IT upgrade is a hassle.

"Security has always been a cost center. We're turning it into something that makes you money," said 27-year-old co-founder Luke Sontag. "We're saying, 'Yo, we're going to give you higher security, and we're going to pay you to install it.'"

So far, Schwab Retirement Technologies, an operating unit of Fortune 500 discount brokerage firm Charles Schwab, has licensed Vidoop's technology and plans to make it accessible to as many as 2.5 million 401(k) customers in November. At least one major media company is negotiating to license Vidoop's technology.

Protecting users' identities has been a major trouble spot in web commerce for years. As technology brings more business and personal activities online, the challenge of keeping personal data safe has grown in lockstep with the opportunities for identity thieves and hackers to steal it -- which is to say, it has grown exponentially.

Hassles
Most solutions only extend the basic model of user name and password by requiring longer terms that include both numbers and letters or adding a single image to identify. But for anyone with multiple e-mails or more than one credit card, this has only created more pain. (A new standard, called OpenID, promotes one ID per user across the web. Trouble is, OpenID isn't widely accepted on consumer websites, so it isn't much of a solution yet.)

Vidoop won't make much money off Schwab Retirement Technologies, which won't utilize Vidoop's ad-revenue-sharing model, Mr. Free said. Instead Vidoop agreed to take a nominal annual license of less than $1 per user, Mr. Sontag said, which will be worth "a few hundred thousand dollars" a year. Why? Because Mr. Sontag and co-founder Joel Norvell are confident that after Schwab RT's deployment, other major financial institutions will follow.

But the real money is expected to come when the company licenses its software to a major media company or web portal such as AOL or Yahoo or even Google -- where advertisers often pay $15 to $20 per 1,000 unique visitors. Vidoop is believed to be negotiating contracts with several of these companies, though Messrs. Sontag and Norvell wouldn't comment on current business developments.
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