The New Gatekeepers

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You can't blame consumers for feeling a bit paranoid online. With cookies tracking their every click, it's no wonder they're worried about who's capturing their personal information-and what they're doing with it. A new study of 10,000 Web users by the Graphic, Visualization and Usability Center at the Georgia Institute of Technology found that 71 percent of respondents believe there should be laws to protect privacy on the Internet. A full 84 percent object to content providers reselling information about users to other companies.

Now there may be a way for people to turn their paranoia into profit. It centers around an 'infomediary,' an online broker that works on behalf of consumers. Much like storing important papers in a safe deposit box, individuals would entrust their personal profiles to an infomediary-and charge marketers for access to their data. The infomediary would perform dual roles, gatekeeper and agent. "Slowly but surely, consumers are going to realize that their profile is valuable," says Mike Sheridan, vice president of strategic business at Novell, the Salt Lake City-based computer networking company. "For loaning out their identity, they're going to expect something in return." Experts say it's a win for consumers overwhelmed by raids on their privacy-and a win for marketers frustrated with dismal response rates. There's a potential downside for marketers as well. If the concept plays out, many companies could see their control over customer relationships slip into the hands of infomediaries.

Consider this scenario: A consumer informs her infomediary that she's shopping for a sports-utility vehicle and that she'd like to learn about new models. The infomediary relays this message to SUV makers. Based on the consumer's expressed preferences, the infomediary discloses her basic demographic profile and instructs the companies to send ads to her by e-mail only (the woman hates to be interrupted by telemarketers during dinner). Working through the infomediary, the SUV makers dispatch targeted e-mail promos to the consumer, hoping to woo her into their dealerships. The companies pay the infomediary for access to the consumer;the infomediary, in turn, rewards the consumer-maybe with cash or another incentive-for her time and attention.

Already a handful of startups are billing themselves as infomediaries. Last month, El Cerrito, California-based Lumeria debuted SuperProfile, an encrypted Web form that includes all of an individual's personal information-their address, age, gender, income, credit card numbers, and so on. An opt-in service lets consumers pick and choose companies that wish to contact them about a particular product. Marketers pay an access fee to Lumeria, which passes on a substantial chunk-80 percent-to the consumer, says CEO Fred Davis.

PrivaSeek in Louisville, Colorado, touts a similar product. Users fill out a 'persona' profile and a software tool-dubbed the 'valet'-tracks the use of that data online. For example, the valet could automatically fill out Web forms with info culled from the persona and update the profile with transaction or clickstream data. PrivaSeek stores the persona in a secure web facility (the company calls it the 'vault'), with the consumer holding the key. "It's their own personal datamart," says PrivaSeek CEO Larry Lozon. "The consumer will be in charge of a brand called 'me.' " Like Lumeria, PrivaSeek will also play matchmaker between marketer and consumer, provided that the consumer wants to be courted. Neither company plans to advertise in the near future; for now, they hope viral marketing (a.k.a. word of mouth) will jumpstart their database.

But will consumers trust a startup they've never heard of with all of their personal information? Doubts about security could plague new companies that promote even the most stringent policies on privacy. "In principle, it's possible to have honest brokers between a person and a corporation," says Amitai Etzioni, a social scientist at George Washington University and author of Limits of Privacy. "But you have to ask the question that Plato raised: Who's going to guard the guardians?"

Traditional companies, some experts contend, may be better suited to become infomediaries because they've spent years cultivating the trust of their customers. "The brick-and-mortar guys may have a bigger card to play than they're currently given credit for," says Novell's Mike Sheridan. "They have a trusted brand."

Novell wants to help those trusted brands evolve into infomediaries. Citigroup and First USA, two leading financial-services companies, are currently testing Novell's digitalme product, which stores personal data, passwords and credit-card numbers for consumers. Digitalme users can update their profiles at any time and selectively unlock information for merchants, Web sites, and individuals. Testing digitalme makes sense, says Dan Schutzer, vice president of E-citi at Citigroup, because the company already plays an infomediary-like role. "If you're a Citibank customer today and you apply for a loan elsewhere," he says, "we're requested to provide information on your behalf to that third party."

Indeed, John Hagel III and Marc Singer, principals at consulting firm McKinsey & Company, contend in their new book Net Worth that successful infomediaries will emerge from partnerships between nimble Internet-based businesses and traditional companies with large customer databases.

There's room for multiple infomediaries as well. Consumers might have a trusted agent for financial services, another for recreation, and still another for their healthcare needs. As the relationships strengthen over time, says Don Peppers, partner at consulting firm Peppers and Rogers Group in Stamford, Connecticut, there's more incentive for the consumer to stay loyal. "If he moved on, he'd have to re-teach the competitor what he's already taught you," Peppers says. Having a category focus will be important in the early stages of infomediaries, McKinsey's Hagel adds. "It will be difficult to approach customers from the start and say, 'Trust me. Now tell me everything about yourself,'" he says. Which categories are ripe for infomediaries? Hagel says cars, housing and healthcare.

Still, it's questionable whether a company in a particular industry could deliver unbiased information. Would American Airlines, if it were an infomediary, really promote a cheaper flight on Delta to its customers? "Companies are least credible in their own domains," says McKinsey's Singer.

In a world of infomediaries, what might be the consequences for business? More effective marketing is likely, since companies will be able to target consumers who've expressed interest in their product. Hagel and Singer suggest infomediaries will capture customer relationships-and that other companies will be forced to think about what data is most valuable about their consumers. Predicts Hagel: "The focus won't be on what data you own, but on how you use the data."

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