You may have noticed the news last week that AT&T is rolling out new, ultra-fast residential Internet service in Kansas City. But along with that announcement came a novel pricing structure: the service is $70 per month, or $99 per month if you want your online activity to remain private. Leave aside the ethical and moral arguments for a moment and just look at the optics. There it is in black and white: AT&T will monitor your web searches and browsing activity in order to serve up tailored advertising unless you pay a hefty premium to avoid this. Unsurprisingly, the press uniformly reported this as a “privacy premium” or “no-spy fee.” You are left with a creepy feeling about AT&T, and this pricing approach certainly doesn’t work to burnish the company’s brand. Also, is a typical residential customer really worth $350 in advertising revenue? This feels more like a penalty fee than recovery of foregone revenue.
And what about the ethics and morality? Many will argue, plausibly, that this is no different from what Google, Facebook and many others do – offering you services where they monitor your activity in order to better target advertising. All AT&T is doing is giving you an (paid) opt-out opportunity.
The small but important differences I see are two: the AT&T service is paid, and AT&T is in a privileged position as the on-ramp for its customers. If you offer a paid service, the business model is explicit and understood by both parties. Trying to further monetize your customer is good business, but it’s also a delicate business because you risk killing the golden goose. And when you put yourself in the position of having access to sensitive customer data (even if you don’t think it’s all that sensitive), you are in a trust position. When trust is lost, it’s very hard to get it back.
The implications for B2B data publishers? Paid subscription services come along with a customer expectation of privacy. After all, your subscribers are using your databases to check on competitors, look for acquisition candidates, plan business strategy and lots of other sensitive activity. Even the perception that you are peeking into their activities for anything other than system maintenance represents a huge breach of trust that can seriously damage your brand and your business. Consider, as just one example, the blowback Bloomberg experienced when its customers learned that Bloomberg editors could and did access their accounts.
Think hard about your own approach to customer privacy. Don’t fall into a common trap of thinking that because all this customer data is so accessible to you, it’s yours to use. It even filters down to everyday activities such as managing customer engagement. Contacting customers that haven’t logged in in 60 days is one thing; calling them up to discuss their recent queries probably crosses the line.
Privacy doesn’t get discussed much in the context of B2B data products in large part because it is an implicit customer expectation. But if pricing models such as this AT&T model proliferate, publishers that are serious about customer privacy will likely have a strong competitive advantage.