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Amazon.com Lists What's Selling Where
Privacy Concerns Spur Opt-Out Option
By David Streitfeld
Washington Post Staff Writer
Friday, August 27, 1999; Page A01
"The Microsoft File: The Secret Case Against Bill Gates" is a
bestseller among
Microsoft employees. At MCI WorldCom, they're buying "The Electronic
Day
Trader." At the Library of Congress, "Gary Null's Ultimate
Anti-Aging Program" is a
hit. And at National Semiconductor, it's not just circuits: "101
Nights of Grrreat Sex"
is on the company's Top 10 list.
All of this information is revealed by the online bookseller
Amazon.com, which has
started featuring thousands of individual bestseller lists
calculated by Zip codes,
workplaces and colleges -- wherever its customers are ordering from.
With a simple
mouse click on the company's World Wide Web site, you can peek
behind the
scenes at the books that specific groups are reading as well as the
compact discs
they're listening to and the videos they're watching.
Amazon describes it as "fun" and happily announced it in a press
release last week,
which was followed by a number of media reports. Late yesterday,
however, citing
complaints from customers, the company backtracked significantly.
Customers will
now be able to opt out of the data collection by indicating that
they don't want their
purchases included. Companies will also be able to choose not to be
included.
If you work for the Federal Deposit Insurance Corp. and want to buy
a copy of the
CD "Zoot Suit Riot: The Swingin' Hits of the Cherry Poppin' Daddies"
-- and
apparently many employees there do -- you will no longer have it
chalked up
statistically for all the world to see.
The episode underscored again the unique power of Web technology to
collect in
vast detail about the likes, dislikes and buying habits of millions
of consumers and
zoom in on the data in ways unprecedented in the annals of marketing.
"We're taking chances, we're innovating here," said Amazon spokesman
Paul
Capelli. "This program is building community and adding a unique
feature that never
could have existed before the Internet."
The chief executive of the trade group to which Amazon belongs, the
American
Booksellers Association, had a different view. "This is outrageous,"
said Avin Mark
Domnitz. "One of the things that people are afraid of with computers
is that they are
so powerful, and they collect extraordinary amounts of information
about
individuals. We could create an environment where people are afraid
to go online."
Domnitz's remarks were echoed by leading independent booksellers,
who already
were not among Amazon's great fans. "It's just one more step along
the road to a
complete loss of privacy for consumers," said Bill Petrocelli of
Book Passage in
Corte Madera, Calif.
Andy Ross of Cody's, a large Berkeley store, said: "It's like 1984
has arrived. What
people are reading, thinking about, the ideas they're working with,
should be
completely confidential, but with Amazon they're not."
No one interviewed yesterday was particularly bothered by Amazon
compiling lists
by individual Zip codes -- that's just a more specific version of
the national and
regional lists that have been a feature of the book trade for
decades. Their concern
was over the hundreds of lists specific to individual corporations,
colleges and
universities, and a sprinkling of nonprofit groups and government
institutions.
"You can't say there isn't a privacy invasion here," said Robert
Biggerstaff of the
National Association Mandating Equitable Databases, a consumer
group. "It's not
traced back to the individual, but they are invading the privacy of
the company.
"It's unfair to the company to identify their employees as having
these particular
reading tastes, and it's risky for the employee, who might be buying
a book that
causes them to receive scrutiny from their employer," Biggerstaff
added.
Sophisticated software that remembers and correlates specific
customer information
-- such as Zip code, e-mail address, subjects searched for,
purchases for oneself and
others, essentially every move you make on a Web site -- is what
permits Amazon
and other Internet companies to engage in what is known as "data
mining."
The Internet commerce industry generally sees it as the road to
greater
personalization in marketing -- in the interest of both buyer and
seller.
Amazon said its point in publishing the lists, besides "fun," is to
help consumers
buy more books and tapes. "If you realize that everyone around you
is buying a
certain book or CD, you might think, 'Maybe I'll get this too,' "
said Capelli.
Or, he added, if your niece is going to New York University and you
didn't know
what book to give her, you could look at the list of NYU bestsellers
and get her, say,
"Mergers, Acquisitions and Corporate Restructurings."
Critics, though, see it as the road to trouble. "We have to be
extremely concerned
where this is going to lead," said Judith Krug, director of the
Office for Intellectual
Freedom of the American Library Association.
Donna Hoffman, co-director of the electronic-commerce center at
Vanderbilt
University, agreed: "It could get pretty scary, depending on where
you live, work
and go to school. These lists might begin to define interests most
people would
prefer to keep private," such as, for instance, sexual tastes.
The Amazon program, called Purchase Circles, is "a clever tool, but
it has very dark
privacy implications," Hoffman said. "If I come up with better tools
to attract you to
my Web site, I can learn more about you. The more I can personalize
my site for you,
the more I can customize my offering, the more interesting it will
be to you. Amazon
is showing the power of mining the database."
Mining the database of its 10 million customers is where many
observers believe
Amazon is headed. Since it's so easy to compare prices on the Web,
many consumer
goods are sold near or at cost. Instead of making a profit,
e-commerce companies are
concentrating on serving as many customers as possible. The money,
they believe,
will come later, when the they can be full-service destinations for
all shopping
needs.
Amazon just reworked its Web site so customers looking for new books
by an
particular author are also told what is available by him at the
firm's auction site. If
you order a dog-care book, they try to sell you pet food. Want a
videotape of "Gone
With the Wind"? Sure, but did you know it was a novel, too?
The possibilities are infinite, and so is the amount of money that
can be made. It's
why Amazon, which has never made a profit and shows no sign of doing
so in the
immediate future, is a Wall Street darling.
How happily consumers will come along for the ride is still
undecided. "Amazon is
really pushing the envelope here," said Vanderbilt's Hoffman. "It
would be hard to
find a consumer that didn't think this new idea was cute and
entertaining. But
consumers are also going to say, 'I didn't know they were doing that
with my data. I
didn't even know I gave them permission to do that.' This raises the
awareness of
the privacy issue much higher."
Whether Amazon intended to do that is another matter.
"One of the big question marks surrounding electronic commerce is
privacy, and the
lack of confidence that many potential customers have about
transacting [business]
online," said David Sobel, general counsel of the Electronic Privacy
Information
Center.
"It doesn't seem like a good business decision to do something that
highlights your
collection of customer profiles," he added. "It throws fuel on the
fire."
Amazon's change of heart may help to quell some of the privacy
fears, but it also
rendered the bestseller lists largely useless, because readers will
never know what
percentage of book buyers at a company or college opted out. Amazon
spokesman
Capelli conceded that the surveys are "not scientifically valid."
Many of the books, CDs and videotapes that are popular at a company
or institution
are the same ones that everyone else is buying. But some reveal the
particular
characteristics or tastes of the groups involved.
For example, while the impeachment of President Clinton might be a
receding
memory everywhere else in America, Senate staffers are still buying
Chief Justice
William H. Rehnquist's "Grand Inquests: The Historic Impeachments of
Justice
Samuel Chase and President Andrew Johnson." At No. 5, it's
outselling Bob
Woodward's "Shadow," a much more recent political book that is a
much bigger
seller nationally.
Similarly, it might come as a surprise to some that the most popular
musician among
customers from the military is ethereal neo-pagan singer Loreena
McKennitt, whose
CDs hold the No. 1 and No. 3 spots.
Companies and institutions contacted about their Amazon bestseller
lists declined
to comment. The exception was National Semiconductor, where
spokesman Bill
Callahan said the popularity of a sex manual didn't mean it was a
particularly
swinging company.
"I've noticed nothing, and I've been here 15 years," said Callahan.
"This has always
seemed like a pretty typical run-of-the-mill high-tech company."
� Copyright 1999 The Washington Post Company
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