Blatant invasions of consumers? personal privacy are leading to a new breed of third party intermediaries on the Internet and a new word in the hi tech lexicon, the infomediary.
Although the role of the infomediary is still in flux, they are expected to act as a trusted third party or kind of personal agent that gathers information to negotiate with vendors on behalf of consumers.
But analysts say infomediaries will emerge first in markets where product lines are rapidly changing and complex and where pricing is complicated and difficult to understand, which means that part of their value will be in lowering interaction costs.
Because customers will interact with infomediaries primarily over the Internet and because the infomediary's services will essentially be information based, they will also find fertile ground in markets where products and services have high information content and can be delivered in digital form.
It was John Hagel who first coined the phrase, infomediary - a contraction of information intermediary - in a 1996 Harvard Business Review article called: "The Coming Battle for Customer Information." He later wrote a book with Mark Singer called ""Net Worth: Shaping Markets When Customers Make the Rules," which is a blueprint for the infomediary business model.
In the book, the authors define the infomediary's role as a traditional one. As consumers take increasing ownership of their own behavioural and transactional data, they will create a new form of information supply. By connecting information supply with information demand and by helping both parties determine the value of that information, infomediaries will build a new kind of information supply chain.
This is very timely because the US Federal Trade Commission is becoming increasingly anxious about protecting the privacy of consumers who browse and shop online, and the European Union is tightening controls over what personal data may leave the Continent.
Net Worth also predicts that infomediaries will profoundly affect today's markets by shifting the balance of power away from marketeers to consumers. This will see consumers moving into a position where they make most of the rules, and in their book, the authors state: "Infomediaries will protect the privacy of their clients and provide new ways for customers and vendors to find each other."
As a result, while there is currently a big trend in Web marketing to use personalisation technology to gather enough information about visitors to provide them with individual pitches, many start ups are approaching personalisation from a different angle.
One such one and a half year old start up, Privaseek, aims to give consumers total control over their personal information so they can allow Web marketeers to access only specifically authorised data.
The company's Personaxpress offering provides a privacy service for consumers and a marketing service for electronic retailers. Consumers register their personal information, name, credit card information, email address, income and preferences on the Personaxpress Web site and choose what, if any, information they want to share with ecommerce marketeers.
For instance, a new mother might permit disposable diaper companies to send her coupons by email. The diaper company would get the address from Privaseek, which acts as an information broker or "infomediary."
The idea, according to Larry Lozon, PrivaSeek?s chief executive, is that consumers and marketeers on the Internet are matched by mutual consent only.
Steven Lucas, Privaseeks' chief technical officer, explains: "When consumers come and fill out what we will call our 'persona,' they can fill out a quick one or get into tremendous amount of detail. You can fill out information on likes and dislikes, or you can get down and say, "I only want my age to be used for certain organisations."
He adds that trust is the magic ingredient that will enable infomediaries to either sink or swim, and that Personaxpress stands as a gatekeeper between users and marketeers.
Consumers use the free service to maintain, update and control the type and amount of personal information that marketeers and advertisers draw from as they browse the Web. They are invited to build their Personaxpress profiles, which are encrypted and stored in the Persona Vault, and companies wanting to access it must pass through a screening process and then sign a contract stating they will adhere to a set of privacy practices.
"The online profile model right now is analogous to going into your Kmart and instead of saying Hi, welcome to Kmart, they would say, Hi, can I see your credit card? and then swipe it," Lucas says.
But several other companies are also poised to launch infomediary services in the coming weeks, including Lumeria.
Fred Davis, Lumeria?s chief executive, says he is not concerned that Privaseek has a head start over it, however.
"Internet time continues to astound us. The infomediary business is too big for one player or a proprietary solution, there is a Balkanized market. This industry has only recently been christened," he claims, adding that Lumeria expects to release an open source version of its system in future so that other infomediaries can support it.
The firm?s Superprofile technology is based on the principles of the World Wide Web Consortium's Platform for Privacy Preferences project (P3P), and ensures that only individuals know the contents of and have control over their Superprofile.
Lumeria promises not to reveal any information without the consumer's consent and takes technological measures to prevent the individual's profile from being known, even to its own executives.
Another Silicon Valley start up has also just rolled out what it calls the first Internet service dedicated to putting consumers in control.
Syhamala Reddy, Populardemand?s vice president of product development, says the firm promises to reduce junk mail and telemarketing pitches by continually submitting members' information to the Direct Marketing Association's (DMA) list of "do not send or call" names.
She adds that, while individuals can submit their own names to the DMA?s list, the convenience of using the company's Web site, www.populardemand.com, to register outweighs any hesitation users might have about submitting their names, addresses and telephone numbers.
"We don't need to trick, bribe or bait anyone to predict what they want to buy. We just ask them," she claims.
And a Canadian software start up has also developed what it calls "total privacy technology" that enables users to happily surf the Net without being traced.
Zero Knowledge Systems says its Freedom 1.0 service will be available in open public beta this month, and enables users to establish separate "pseudonyms," which are anonymous identities that can send and receive email and browser cookies and engage in chat sessions.
Pseudonyms can be used for particular purposes and for as long as a user likes. For example, to debate politics online, surf activist Web sites, email political contacts or talk in political chat rooms, customers can designate a pseudonym as their "politics" name, but avoid being profiled by Internet marketeers.
Austin Hill, Zero Knowledge Systems? president, says: "When you browse the Internet, your personal information is routinely collected and often distributed without your knowledge or consent. With Freedom, you can safely browse Internet sites, participate in public discussions, chat and send email without revealing any of your personal information."
But McKinsey & Co has recently issued a report that said very few companies would be in a position to become infomediaries.
"The best candidates to play this role are companies that have ongoing relationships with customers in a variety of commercial activities and have earned those customers' trust. Through such relationships, these businesses have the opportunity to collect detailed information," it stated.
"We suspect that infomediaries will initially specialise in managing information for general, vertical product categories. We could see some infomediaries helping customers manage only their financial data and others focusing on addressing other information," it continued.
"But we might also expect to see such vertical infomediaries evolve over time into broadbased partners with their customers, managing more integrated and comprehensive profiles," it added.
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