Trade With Dave

Why is it that every time I try to make friends with a corporation it becomes a little bit too friendly?  Have you ever met someone who didn’t seem to be aware of the concept of “personal space”?  When they talk to you they stand a little bit too close and they don’t even realize it.  Human beings are naturally social beings.  We are born with innate abilities to acclimate, function and modify our circumstances based on how people make us feel about others and ourselves. 

From a physical standpoint, there are key indicators in body language that help us to stay safe, to engage with others and even to express love.  For example, if you don’t know someone or if you feel threatened, it would be customary to stand about two arm lengths away from that person.  They can’t touch you and you can’t touch them even if you try.  If you are comfortable with someone you will stand within one arms length, but just slightly out of reach.  If you want to express intimacy to someone you come within that natural boundary.  These behaviors are natural.  Is there any reason why we should expect a corporation to understand what is natural only to humans?  

Corporations Are Like Four-Year-Olds

If you’ve ever watched very young children from different families play together at the beach, then you understand the discomfort that can surround a lack of basic social structure.  If one family spreads their beach blanket within the acceptable radius of a four year old child’s freedom circle (let’s say 40 feet) only to discover another four year old in the adjacent circle then you know what I’m talking about.  Four year olds don’t wait for an invitation before walking right over and grabbing the plastic pail and shovel from the adjoining “property owner.”  They are also not famous for following the directions of their parents such as “play nice” or “Tommy, share your toys.”  How exactly is Tommy supposed to share one shovel?

The idea of being invited, whether it’s for a play date for preschoolers, a business luncheon or to a dinner at the White House, is as ancient of a concept as trust itself.  It’s natural to think that receiving an invitation is somehow an honor to the recipient and in many cases it is.  Just imagine being invited to dine with the Governor of your state or entering the home of a well-known and powerful business executive for a holiday party. 

I recently received an invitation to go pheasant shooting with the governor of South Dakota.  It certainly made me feel important, although it was strictly based on a business opportunity.  In many cases however, it isn’t the invitee who is being honored by the invitation as much as the host is being honored by the potential of your presence.  It’s one thing for the governor of South Dakota’s economic development team to invite me on a hunting trip – that’s simply business.  They didn’t become headquarters for companies such as Citibank Credit Cards and the home of unlimited interest rates without being aggressive.  It’s something altogether different to be at a Christmas party at my home and see the governor of South Dakota show up.  That’s an honor. 

The Honor of Your Presence is Requested…

This correlation between who should be invited (receive the honor) and who will actually attend (return the honor) becomes the focus of every young bride and her mother as they carefully plan out the wedding invitation list.  No matter how you try to break it down the process of inviting another person is one of great potential and great risk.  It is the existence of such subjective issues as friendship, obligation, respect, trust, honor, business, rejection and even presumptuousness that form the ingredients of that most elusive of concepts known as social structure.  Social media tools such as Facebook, Twitter and scores of others may have made the production of extending invitations and reporting our status addictively simple, but in reality the implications of the actual invitation are no less significant than if it were sealed with hot wax, embossed with a signet ring then delivered on horseback. 

You may choose to make the trip to the local high-end boutique and select a box of Crane’s engraved stationery and hire a calligrapher to address your invitations to life’s great events (wedding, birth announcement or simply “We’ve Moved”).  Then again you may choose to simply update your Facebook status.  Regardless of your choice of media for your message, the fact remains that the choice is yours.  Whether you are the sender of an invitation or the recipient, it is an inalienable human right to be able to choose whom we honor with distinctions no less precise than those of a table seating chart.

In Your Face

In a networked world where making decisions is as easy as a mouse click surrounded by the bombardment noise of literally thousands of offers every day, concepts such as honor and respect can seem a little fuzzy at times.  Nonetheless, as human beings we have an almost innate ability to sense respect and disrespect when they emerge in real life, no matter how deeply they may be buried within the fine print of a privacy policy.  Facebook’s legendary advertising blunder known as Beacon launched in November of 2007 was eventually shutdown in September 2009 following a class action lawsuit over privacy concerns.  Craig Newmark (founder of CraigsList.com) was recently interviewed by Matthew Ingram (Gigaom.com) regarding the next big thing on the web.  Newmark described the trend as “reputation and trust ruling the web, just the way it does in real life,”

(link to the video interview http://www.blip.tv/file/3375188/). 

Against the backdrop of social policy missteps (intentional or not) of Facebook’s Beacon and Google Buzz,  Newmark still characterized these corporations as “The big trustworthy sites” who should work together to enable a new distributed trust and reputation network.  The folks at Craigslist.com, as one of the single biggest hangouts for predators on the web, know a thing or two about the value of trust or the problems with the lack thereof.  As an unregulated hotbed for both social and anti-social behavior a lot can be learned from Craig Newmark’s site.  In regard to sites (i.e. corporations) being “big” and “trustworthy” as Craig describes, I couldn’t help but wonder if he had read the in-depth investigative report from Business Insider describing the events surrounding the founding of Facebook.

At Last – Finally The Full Story Of How Facebook Was Founded

Here’s a link to the full article:

http://www.businessinsider.com/how-facebook-was-founded-2010-3#

In this amazing article of March 5, 2010 by Nicholas Carson, he details the fantastic chain of events surrounding the founding of Facebook at Harvard University and the subsequent $65 million out of court settlement paid by Facebook to settle claims against Mark Zuckerberg, its co-founder.  The article also details the evidence of alleged account privacy being violated through the hacking of email accounts. 

(two other articles here: http://www.businessinsider.com/how-mark-zuckerberg-hacked-connectu-2010-3 and http://www.businessinsider.com/how-mark-zuckerberg-hacked-into-the-harvard-crimson-2010-3)

I would remind Mr. Newmark that only people are able to act in an honorable and trustworthy manner and that corporations (i.e. “big trustworthy sites”) are only able to act for the benefit of their shareholders while both people and corporations are required to stay within the letter of the law.  Being within the law and being “trustworthy” should never be construed as congruent concepts especially when laws have not even been written relating to many emerging technology concepts.      

Sharing your information, private or otherwise, with other companies is big business.  Looking back on the recent launch and backpedaling on policy of Google’s Buzz product and Facebook Connect’s recent suggestion of a new policy brings privacy of social networks into the forefront.  No doubt these companies (Newmark’s big trustworthy ones) are struggling to manage the privacy policies that have been in place for years in light of new innovations relating to mobility.  Here’s the link to a recent article on the Facebook announcement from readwriteweb.com:  http://www.readwriteweb.com/archives/facebook_may_share_user_data_with_external_sites_a.php.

This Mailbox is Property of the U.S. Postmaster

I remember as a kid noticing that wording stamped on the inside of our mailbox.  I had no idea what it meant, but as kids who terrorized the neighborhood with everything from rolling yards with toilet paper to throwing snowballs at passing cars, we never messed with people’s mailboxes.  It was an unspoken rule.  Later on I became the president of a national direct marketing company during the advent of the Federal Trade Commission’s “Do Not Call” initiative.  For years it had been open season on the mailboxes of America for direct mail companies and our company was sending literally millions of direct mail offers to businesses and individuals.

The Glienicke bridge was prominently featured in the 1966 movie thriller ‘Funeral in Berlin’ based on Len Deighton’s suave spy character Harry Palmer played by Michael Caine.

Berlin’s Bridge of Spies, as it became known, was used for prisoner exchange three times between 1962 and 1986.  In the same fashion, our mailboxes served as a free trade hand-off zone between businesses and consumers.  Thanks to the Postmaster General, every resident had their own no-man’s land where the trusted postal carrier could anonymously, yet safely, meet to do business under the privacy enforcement of armed postal inspectors.  The movie’s three minute trailer brings to light the all-important concept of motivations, when the viewer is urged; “Don’t follow Harry Palmer.  Follow the people who follow Harry Palmer – don’t let them out of your site… not for a minute, not for a second.”

http://www.youtube.com/watch?v=bPUDG2y0wr8&feature=player_embedded#

What had been an accepted practice of near-home invasion by marketers, not only within the culture but also within the law, had spilled over to the telemarketing world and it wasn’t pretty.  People who tolerated mailboxes overstuffed with everything from LL Bean catalogs to offers from credit card companies were not so willing to get up from the dinner table to answer a phone call from a telemarketer.  Your mailbox, positioned strategically at the edge of your property – many times within the right of way along the road, was considered no man’s land.  It was the equivalent of a marketing demilitarized zone of sorts. 

Personal mail and marketing offers were to be quietly dropped off everyday at the appointed time, only to be picked up at the convenience of the recipient and easily dropped into the trash bin – even before entering the house when necessary.  With the exception of the clear-cutting forests and contaminating our rivers with paper mill waste, this was a beautiful system for the classic direct mail marketer and the telemarketers wanted in on the action.

Invasive Real Time Communication – “Hold it Harry Palmer!”

It wasn’t long before the steadily rising cost of postage combined with the high conversion rates and high average ticket size of a live salesperson calling proved that telemarketing was a very profitable way to sell certain products.  Phones were ringing off their hooks across America. 

The Federal Trade Commission’s Telemarketing Sales Rules originated in 1995 and were amended in 2003 in conjunction with the National Do Not Call Registry being signed into law that same year.  Although answering machines, and later on voice mail systems, improved the management of all these calls from a consumer perspective, ultimately the outcry from one too many interrupted dinners was too much for the great American consumer and led to the legislation curtailing the practice of most types of consumer telemarketing. 

Unlike your friendly neighborhood shop owner, corporations just don’t know when to stop.  Business was not going to ease up simply because people are becoming uncomfortable with the reality of the profit motive and how it plays out at the dinner table or even today against the backdrop of geographic positioning of mobile technologies and its implications to privacy and safety.  Companies will continue to push until consumers push back either by voting with their pocketbooks or contacting their elected officials.  Up until now at least, the United States has been an interactive democracy based on the market forces of capitalism.     

Asking for Forgiveness Rather Than Permission

Back on February 14^th, 2010 I wrote in this blog (http://tradewithdave.com/?p=151) about a similar blunder to Facebook’s Beacon with the launch of Google’s Buzz product.  In a short article titled “Do You Trust Me?  Do You Trust My Company?”  I talked about how Google’s response of “We’re very sorry” and “We didn’t get everything quite right” was lame and most likely premeditated in my opinion.  At the same time I believe this is exactly what we should expect from corporations, just not necessarily from the people who run them such as Todd Jackson the Product Manager at Google responsible for Gmail and Google Buzz.  What is good for Google’s share price is not always consistent with what is good for Todd Jackson’s credibility.  That’s where the honor and respect come in – they’re a human function regardless of any impossible corporate mandate such as Google’s strange and self-directed ethos of “Don’t be evil.”  

Here’s the link to the official Google response. http://gmailblog.blogspot.com/2010/02/new-buzz-start-up-experience-based-on.html. 

I’m sure they are not the most leading edge technology company, but I’ve been using Constant Contact for a variety of email marketing campaigns for nearly a decade.  There’s one thing that I have always enjoyed about doing business with ConstantContact.com and I think it reflects in their $25 per share stock price (symbol: CTCT) today.  They embrace the fundamentals of honor and respect.  You see Constant Contact goes beyond the requirements of the CAN-Spam act by helping to make sure their customers practice responsible email marketing.  The company’s best practices are based on the fundamental concept of asking for permission rather than simply saying “Sorry” which has become the legacy of Facebook’s Beacon and Google’s Buzz launch.  It is understandably tempting for a corporation to explode their network exponentially with the simple modification of a privacy policy or the exploitation of never before conceived connectivity that is now available through leveraging the user-built “friends” and “followers” networks of Facebook and Twitter respectively. 

The amount of money to be made and instant value creation for advertisers is very compelling to the corporation and its shareholders in the same way a moth is attracted to a flame.  The leaders of these tech companies are faced with the huge challenge of harvesting the value from their corporations to keep up with the “Jobses” (i.e. Apple execs take in millions for March 2010 – Cook $68.8, Oppenheimer & Johnson $45.9 million each, Schiller $34.4) while simultaneously attempting to hold onto an increasingly fickle community of users.  This is what Mark Zuckerberg of Facebook has described as being in their “sweetspot.”  I’m not sure it’s so sweet when the next step you plan to take is violating the privacy of your user base.

Laptop/Social Becomes Handheld/Mobile

 There is a very important distinction between connecting with your friends and family through the great efficiency of the web within the confines of your home, office or dorm room as compared with out-of-home environments.  It’s something altogether different to connect at the local mall or Main Street public environment with no expectation of privacy.  You see when you are at home, not only are you relatively safe, but the companies that are most likely to be able to do business with you are companies such as Amazon, E-bay, Overstock.com or maybe the local Domino’s Pizza. 

Once you leave the home and become mobile, the companies that are most likely to be able to do business with you are bricks and mortar companies in the neighborhood, be they independents or chain stores.  Not only can your friends find you in the field, companies can connect with you too through the rapidly expanding geographic capabilities of positioning utilities.  The basic privacy and protection that you once had within your home sitting alongside your Dell Dimension desktop is now compromised significantly by the new geo-tagging utilities building the out-of-home market.  Innovative new solutions such a foursquare.com and gowalla.com are game changers.  It’s one thing for you to send out a tweet that you’re at the Cinnabon stand at JFK Airport.  It’s another thing altogether for my mobile phone to notify one of my “friends” that I am approaching that Cinnabon simply because I failed to opt-out of some obscure change to their privacy policy that was described by their leadership as “not new.” 

Seamless is the New Black

Barry Schnitt, Facebook’s Senior Manager, Corporate Communications and Public Policy has described Facebook’s draft policy for the changes to their Connect products as “not like a new experience” rather “even better and more seamless.”  In other words, being “Off of Facebook” is not new… it’s just seamless if your device happens to be logged into Facebook” whether you had a reasonable expectation of that new reality or not.  It would be the equivalent of saying once you’ve check in through Customs in the Bahamas if you decided not to board the plane for some reason (I’m thinking a major thunderstorm or visible equipment failure) you would be forced to board because you had already accepted a boarding pass.  Of course, if you’re not enjoying the ride you can opt-out once the plane is in the air.  Just ask the passengers who had their social graphs exposed unexpectedly by the launch of Google Buzz. All of this would be justified by the fact that the airline is able to provide you with a “more useful” travel experience.   

In an extreme example of being unexpectedly “found” at Cinnabon, global positioning exposure is “more useful” (According to Facebook) even if the outcome is death by anthrax-tainted cinnamon bun courtesy of British spy Harry Palmer.  As we learned in the movie trailer for Funeral in Berlin, gaining access to the freshly made cream cheese frosting is a breeze for operators such as Michael Caine’s Harry because as the movie trailer says “Girls always make passes at spies who wear glasses.”  No doubt a female cashier would fit into this subset. 

Real-life marketing and fictional spying aside, the legalities of social media are the equivalent of property rights during the California Gold Rush of 1849.  Here’s a link to the comments by Michael Richter Deputy General Counsel for Facebook in regard to the proposed policy change. http://blog.facebook.com/blog.php?post=376904492130

Below is a direct excerpt from the proposed policy changes by Facebook.

Pre-Approved Third-Party Websites and Applications. In order to provide you with useful social experiences off of Facebook, we occasionally need to provide General Information about you to pre-approved third party websites and applications that use Platform at the time you visit them (if you are still logged in to Facebook). Similarly, when one of your friends visits a pre-approved website or application, it will receive General Information about you so you and your friend can be connected on that website as well (if you also have an account with that website). In these cases we require these websites and applications to go through an approval process, and to enter into separate agreements designed to protect your privacy. For example, these agreements include provisions relating to the access and deletion of your General Information, along with your ability to opt-out of the experience being offered. You can also remove any pre-approved website or application you have visited here [add link], or block all pre-approved websites and applications from getting your General Information when you visit them here [add link]. In addition, if you log out of Facebook before visiting a pre-approved application or website, it will not be able to access your information. You can see a complete list of pre-approved websites on our About Platform page.

You may be wondering what Facebook means when they say “provide General Information about you”?  Here’s the answer.

The term General Information includes your and your friends’ names, profile pictures, gender, connections, and any content shared using the Everyone privacy setting. We may also make information about the location of your computer or access device and your age available to applications and websites in order to help them implement appropriate security measures and control the distribution of age-appropriate content.

With Friends Like These…

In a March 29, 2010 article titled The State of the Internet Operating System (excerpt below), Tim O’Reilly of the publishing house and event producer www.oreilly.com did an excellent job of describing what this new customer experience is going to look like for users who fail to opt-out of Facebook Connect if and when their proposed policy goes into effect. Here’s his take on the trillion dollar brain.

Identity and the Social Graph

 
When you use Facebook Connect to log into another application, and suddenly your friends’ faces are listed in the new application, that application is using Facebook as a “subsystem” of the new Internet OS. On Android phones, simply add the Facebook application, and your phone address book shows the photos of your Facebook friends. Facebook is expanding the range of data revealed by Facebook Connect; they clearly understand the potential of Facebook as a platform for more than hosted applications.

 
But as hinted at above, there are other rich sources of social data – and I’m not just talking about applications like Twitter that include explicit social graphs. Every communications provider owns a treasure trove of social data. Microsoft has piles of social data locked up in Exchange, Outlook, Hotmail, Active Directory, and Sharepoint. Google has social data not just from Orkut (an also-ran in the US) but from Gmail and Google Docs, whose “sharing” is another name for “meaningful source of workgroup-level social graph data.” And of course, now, there’s the social graph data produced by the address book on every Android phone…

 
The breakthroughs that we need to look forward to may not come from explicitly social applications. In fact, I see “me too” social networking applications from those who have other sources of identity data as a sign that they don’t really understand the platform opportunity. Building a social network to rival Facebook or Twitter is far less important to the future of the Internet platform than creating facilities that will allow third-party developers to leverage the social data that companies like Google, Microsoft, Yahoo!, AOL – and phone companies like ATT, Verizon and T-Mobile – have produced through years or even decades of managing user’s social data for communications.

 
Of course, use of this data will require breakthroughs in privacy mechanism and policy. As Nat Torkington wrote in email after reviewing an earlier draft of this post:

 
We still face the problem of “friend”: my Docs (Google Docs) social graph is different from my email social graph is different from my Facebook social graph is different from my address book.  I want to be able to complain about work to my friends without my coworkers seeing it, and the usability-vs-privacy problem remains unsolved.  Whoever cracks this code, providing frameworks that make it possible for applications to be functionally social without being socially promiscuous, will win.  Platform providers are in a good position to solve this problem once, so that users don’t have to give credentials to a larger and larger pool of application providers, with little assurance that the data they provide won’t be misused.

Here’s a link to the entire article by Tim O’Reilly

http://radar.oreilly.com/2010/03/state-of-internet-operating-system.html

 

I can think of at least two key takeaways from this article.  First, there is a better understanding regarding the type of behaviors, from an internet/social/mobile media standpoint, that would would be considered as “socially promiscuous” thereby undermining the user’s perceived integrity.  Secondly, understanding the distinction between human beings and their ability to act in an untrustworthy manner (as in the alleged hacking of email accounts) as compared to a corporation’s policies designed that it would act in a predictable manner for the benefit of its shareholders.  Although that predicatable manner may be legal it should not be deemed to be trustworthy no matter how large the coporation behind a particular platform site may be.  This is particularly the case when the policy is being developed on the fly and in uncharted waters.   

Places Everyone!

How do you feel about Facebook’s willingness to sharing your location (or that of your children) with other people if you fail to opt-out.  They make the claim in their press release that they are doing it with the purpose of “implementing appropriate security measures.”  I have been proposing for some time to a few experts in the field that what appears to be the Social Media Industry, is in reality the Mobile Media Industry.  I am increasingly becoming a believer that the future of these applications and how they impact our lives are less about WHO we are connected to and more about WHERE we are at any given time when we are connected. 

For over a decade the internet has been about connecting from our home or office.  Although there are plenty of opportunities to do business in these environments (for example E-Bay, Amazon, etc.), the holy grail of doing business with people is being with those people.  If you want to sell someone a car, a house, a suit of clothes or any other high-ticket item the best way to do that is to be face-to-face.  The same can be said for a cup of coffee or a hamburger which never as easy to digitally distribute as an Itune or e-book.  As an executive in the direct marketing industry we were pleased with response rates of around 1%.  At the same time, when I was the president of a chain of retail stores our conversion rates from store visitor to customer were above 15%.  The business incentive for out-of-home marketing is obvious.      

The next generation of technologies and business successes are going to be about mobility and where you are physically, not virtually, at any given time.  In the same way that you are bombarded by customized messages on your computer and general messages out in the public, the marketing offers you will receive in the future will become increasingly customized to your behavior and locale.  Just like receiving coupons at the grocery store that relate to the products you buy, you’re mobile phone is your new mobile coupon mailbox, but this will only work if corporations know your exact location.  That’s what the Facebook policy change is all about – PLACE, your specific location at any specific time.

Checking In?

In the O’Reilly article mentioned earlier, Tim says that “Location is becoming a proxy for something else: attention.”  In a bow to applications such as Foursquare and Gowalla, O’Reilly says “originally designed for finding spots where people are congregating, quickly became a focus for advertising, as merchants were able to discover and reward their most frequent customers.  Now the idea of the check-in is being embraced and extended to show attention to virtual locations.”  It’s the ability to monetize this site-specific advertising opportunity nirvana that provides the catalyst for  Facebook Connect, Google Buzz and others to rush towards ammended “out-of-home” privacy policies.  It is the abstract activity stream layered on top of the reality of location that fuses the mobile phone with bricks and mortar business opportunities.  The basic assumption is if you are somewhere (such as a business) then theoretically that location will also be able to grab your attention even if you’re staring at your Iphone which will be presenting  you with a coupon.   

 

             “I would never join a club that would allow a person like me to be a member.”   Woody Allen

I was fortunate to grow up in a home where there we lots of social events; family gatherings, parties with friends, large weddings and the like.  It was always interesting to me how groups formed, who was part of the group and why.  It became obvious to me that we received invitations to a lot of events because we were also hosting a lot of events.  One of the most interesting things to me was the distinction on an invitation of including an “R.S.V.P.” as compared with when to say “Regrets Only.” 

After paying for a few big shindigs myself I quickly gained a more complete appreciation of the French language and their contribution to the management of the original social media tool – the formal invitation. Répondez S’il Vous Plaît (respond if it pleases you) – not only does it sound nice it is the only way to know who will be at the party.  There’s one slight problem however.  Increasingly, in today’s culture, not only do people not understand its importance, they ignore it altogether.  Technologically, we’re evolving from a formal invitation society (R.S.V.P.), to a default opt-out society (Regrets Only), to a default opt-in society (Socially Promiscuous as described by O’Reilly).

If a dinner party was being given and you intended to provide seating and service for your guests, it becomes abundantly clear that you will need to know who will be in attendance.  This is especially true if the hostess will be utilizing the most influential tool in the world of paper-based social media – the place card.  Then again, if you are offering what is commonly referred to as a cocktail buffet where people mingle about and graze on heavy hors douveres, or if you were having a summer picnic with casual seating around the yard and picnic tables, then a “Regrets Only” invitation will suffice.  A missing person or two would not throw a barbecue or picnic into social catering upheaval.  The same can be said of social media’s opt-in origins which are evolving into an opt-out paradigm.

In an effort to get as many attendees as possible to join the internet block party, privacy policies were developed based on primarily the virtual nature of the web experience.  Sure, if you were buying something from Amazon with a credit card, you would be willing to divulge your true identity, but if you were simply posting to a bulletin board or anonymously chatting on Yahoo, being an avatar was good enough to get the job done… not so for the place-based-web brought to you by the mobile media revolution. 

To enjoy the convenience of being easily located by your true friends while having the big expensive mesh network that makes this possible paid for by businesses, they are both (your friends and businesses) going to need to know who you are.  Therein lies the policy dilemma for the huge user bases for Google and Facebook that were formed prior to the explosion of interest in geographic positioning.  Facebook will rely on you to decide who your friends are, but Facebook will decide which corporations you will be making friends with. 

This trend took a giant step forward at the recent South by Southwest Conference 2010 in Austin, Texas where the attendees quickly acclimated to the key advantages of place-based solutions such as Gowalla and Foursquare that provide a physical whereabouts component that is so important to the physical social world we all live in.  It’s irrelevant while sitting at home, but as soon as we show up in Atlantic City for the annual convention for the National Association of Association Executives, the first question on everyone’s mind is “Where’s the party at?” 

You’re Invited!

What:  Privacy Violation Party

Where:  The Semantic Web

When:  “Sometime soon, when we’re done designing and coding”

From: Michael Richter, Attorney for Facebook

Being presumptuous has always been one of the most fatal of all social attributes if you measure social success by actually having and maintaining a sincere friendship or even a casual acquaintence with an individual or a group of people.  Default opt-in (Facebook Connects proposed policy change) is the social equivalent of attempting to join a group or be friends with someone without first being invited to do so.  This is what Tim O’Reilly referred to as being “socially promiscuous” as distinct from being “functionally social.”

Becoming someone’s friend or joining a group is a highly complex social phenomenon that no amount of behavioral software will ever, in my opinion, be able to measure.  In so many ways it would be about measuring that most elusive of all concepts – love.  I have argued for quite some time that “friending” someone on Facebook was really only “acquaintancing” someone, just easier to spell.  For more on this subject you may want to see my previous post titled: Friending as a Quantum Choice http://tradewithdave.com/?p=50

What are the implications to this change for Facebook and its users?  In my opinion, they are quite simple.  In the short run, depending on how successful Facebook is at covering up the implications of their change, they will make a lot of money from harvesting the data and more importantly the data relationships between users (Hey, you fraternity brothers look like you want to go to Cancun for Spring Break!  Sign up as a group and save!).  In the long run, Facebook will enter the classic business phase of diminishing returns as the deterioration of privacy within their default opted-in model will become increasingly clear over time. 

The possible need for privacy, when appropriate, is part and parcel of all social experience between humans.  Facebook’s willingness to place this value within the hands of a user (especially young students) who may or may not understand the need to opt-out is essentially putting the destiny of their company in the hands of its users rather than in the hands of the company’s management.  Furthermore Facebook’s ability to decide which companies qualify as partners is yet another violation of trust and blatant disrespect for its user base.  As convenient as the “just opt-out if you don’t like it” approach may be in providing cover for a company’s leadership cop out, it has proven time and time again to be a fatal flaw for a free market enterprise to violate the trust of its customers. 

Look back at the history of marketing related to the HIPAA Act and most recently the reform relating to the marketing of credit cards.  Those two industries, health care and banking are now essentially operated by the Federal Government.  Craig Newmark said it in his interview that government intervention would likely be necessary.  You can thank Facebook’s leadership for accelerating that Marxist reality to the future of the tech industry too. 

Facebook’s claim that it is “Not like a new experience” but instead is “just more useful” is quite true.  Ironically, the statement is true in that Facebook Connect is not LIKE a new experience, it IS a new experience and as far as being more USEFUL, that is definitely true from the perspective of the shareholders of Facebook.  Being able to peer directly into the social innerworkings of groups and the implications as they relate to commercial transactions for a sample group the size of Facebook is a behavioral economists dream.  It’s what I’m choosing to call The Trillion Dollar Brain in homage to Len Deighton’s Harry Palmer film series.     

Huge communities have coalesced on the internet faster than you can say “Dancing baby.”  These same groups can evaporate into the ether just as quickly.  The mathematical reality of the network effect is what is at work here.  Consumer demand can evaporate quicker than you can say “Call Bernie Madoff and withdraw my account.”  When you decide to throw a party and you choose to print on the invitations “Regrets Only” you are risking your social capital that people will indeed come and honor you with their presence.  If Facebook can pull off an opt-out default model, more power to their management and more cash to their shareholders.  The thing about parties and social life is that just like Wrigley’s Big Red chewing gum – it needs long lasting freshness and in my opinion exposing the private behavioral analytics of your user base in exchange for money is anything but fresh.  It’s as old and stinky as greed itself.   

In the example of privacy policies and the internet Karl Marx was correct when he ascertained that technological developments would outpace a capitalistic society’s ability to regulate those changes.  I would counter his argument and claim that regulation is fundamentally an effect within a cause and effect relationship.  How else would a society know what to regulate if it didn’t first experience the technological change driven by individual initiative?  The citizenry can’t expect regulators to be prophetic, or regulating in hopes of later on experiencing a disruption in need of that specific regulation.  The management of Facebook should not expect consumers to remember to opt-out.  It’s fundamentally bad faith and the entire tech industry will pay a price.  An informed an active democracy is what is called for.  

To see the latest updated version of this graph comparing MySpace and Facebook visitors click here:

http://siteanalytics.compete.com/myspace.com+facebook.com/?metric=uv&months=12

The product life cycle of any company is the collective product life cycle of its products and services.  Great innovators are able to reinvent themselves and their companies as is so clearly apparent in this week’s launch of Apple’s Ipad.  A business can spend its time studying its customers wallet and how to further exploit the relationship, or it can spend its time studying the world and the opportunities to innovate.  No company is perfect and neither are the people who run them, including Apple CEO Steve Jobs.  What all businesses need to realize is the amazing collective intelligence of people and if the motivations of a company’s leadership are bad faith rather than good faith, you will be found out. 

How Many Billions in a Trillion?

In yet another even more prophetic 1967 United Artist’s thriller Billion Dollar Brain, private investigator Harry Palmer is tasked with saving us all from the dangers of the first-ever super computer designed to rule the world.  The movie’s poster coined the not-so-catchy slogan; Pow… Power…Brain Power!  Harry subverts the anti-Soviet extremist group Crusade for Freedom then thwarts the agenda of their self-appointed leader and oil billionaire, General Midwinter, but not before Midwinter’s call to arms:

“Men, our cause is just.  Our mission is historic. You are already heroes.  With God on our side how can we fail.”

(to view a 9 minute video of the making of British-styled Billion Dollar Brain click here: http://www.youtube.com/watch?v=cTglrraUoh8)

In the Harry Palmer  prequel, Funeral in Berlin, you hear the cry of “Look out Harry” and it is plain to see why as his nemisis announces “I have a gun on you!”  In 1967 Harry and his assailant were in the same room.  Forty years later, if remade today the movie line might read “Move about as you wish, I have a geo-tag on your Harry.” 

Since the founding of the free market in the United States, the bottom line has simply been the laissez-faire slogan of “caveat emptor” or “buyer beware.”  In an age where massive financial value is buried within the behavioral economic implications of self-maintained databases about you and your “friends and followers”, there is no need to buy anything to create tremendous informational value.  Harvesting the relational data and selling it to the highest bidder is the plan.  As Cass Sunstein and Richard Thaler spell out in their book Nudge (Caravan Books), you are the product and the information on you and your relationships is the building blocks for the “choice architects” of our society.  These are supposedly the enlightened people who will be able to improve our decisions on health, wealth and happiness if we will just allow them access to the data by not opting out. 

For years the internet was referred to as the Information Super-Highway.  With the advent of the mobile internet, we’re moving from building highways to building bridges, a much more complex task.  It’s what Tim O’Reilly describes as “creating facilities that leverage the social data.”  If the reality of fusing your identity with that of a machine seems a bit callous or anti-social, maybe it will help to remember the classic parting words of the corporation; “It’s not personal.  It’s strictly business” as you wave your mobile phone in front of the credit card terminal authorizing your transaction.  Maybe the free market slogan of caveat emptor (buyer beware) is due for a revision along with the privacy policies of tech firms.  The new slogan could simply be “user beware.”  How do you say that in French?     

Also in this series

The Quantum Nature of Friending

Do You Trust Me?  Do You Trust My Company?

The Spy Who Nudged Me

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This entry was posted on Sunday, April 4th, 2010 at 9:16 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.