The surveillance of consumers has developed into a multibillion-dollar industry conducted by largely unregulated companies that scour web searches, social networks, purchase histories and public records.BENJAMIN HAAS
Corporate competition to accumulate information about consumers is intensifying even as concerns about government surveillance grow, pushing down the market price for intimate personal details to fractions of a cent.
Over recent years, the surveillance of consumers has developed into a multibillion-dollar industry conducted by largely unregulated companies that obtain information by scouring web searches, social networks, purchase histories and public records, among other sources.
The resulting dossiers include thousands of details about individuals, including personal ailments, credit scores and even due dates for pregnant women. Companies feed the details into algorithms to determine how to predict and influence consumer behaviour.
Basic age, gender and location information sells for as little as $0.0005 per person, or $0.50 per thousand people, according to price details seen by the Financial Times. Information about people believed to be "influential" within their social networks sells for $0.00075, or $0.75 per thousand people. Slightly more valuable are income details and shopping histories, which both sell for $0.001.
According to industry sources, most people's profile information sells for less than a dollar in total. "You're not worth much," said Dave Morgan, founder of one of the first companies to use web surfing data to target online ads.
As basic information on consumers becomes ubiquitous, data brokers are tracking down even more details. For $0.26 per person, LeadsPlease.com sells the names and mailing addresses of people suffering from ailments such as cancer, diabetes and clinical depression. The information includes specific medications including cancer treatment drug Methotrexate and Paxil, the antidepressant, according to price details viewed by the FT.
LeadsPlease offers a discount for bulk buyers. The price of a record drops to $0.14 if a buyer purchases 50,001 to 100,000 names.
Another company, ALC Data, sells a list of consumers with specific ailments sorted by credit score. "In the current economy, targeting prospects who have good credit, bad credit or a lack of credit can dramatically affect results," the company states in its marketing materials.
Buyers of ALC's "MH2 Credit Ailment Masterfile" in the past 12 months include Blue Cross Blue Shield, the insurance group, mobile operator Sprint Nextel and TXU Energy, the Texas energy utility, according to usage details on ALC's website.
ALC also tracks more than 80 per cent of all U.S. births and competes fiercely against other data brokers in the baby sector. The company recently unveiled a new "Newborn Network" database containing information about prenatal and postnatal mothers, as well as their aunts, grandmothers, close friends and neighbours. "It is a saturated market," says Lori Magill-Cook, an executive vice-president at ALC.
The U.S. Federal Trade Commission and a congressional committee are investigating the data broker industry to understand what these companies know and how the information is used. Few laws exist in the U.S. that protect the privacy of an individual's data.
The industry operates under self-regulatory guidelines, which bar the collection of information about children, specific health and financial data. Under the guidelines, the tracking and selling of information derived from medical records and prescriptions are allowed if patients' names and other identifying data have been deleted. LeadsPlease and ALC state that the patient-specific ailment information they sell is not sourced from such records, but has instead been revealed by the patients themselves.
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How much are a person's data worth? Not much.
While the multibillion-dollar data broker industry profits on the trade of thousands of details about individuals, those bits of information often are sold for a fraction of a penny apiece, according to industry pricing data viewed by the Financial Times.
General information about a person, such as their age, gender and location is worth a mere $0.0005 per person, or $0.50 per 1,000 people. A person who is shopping for a car, a financial product or a vacation is more valuable to companies eager to pitch those goods. Auto buyers, for instance, are worth about $0.0021 a pop, or $2.11 per 1,000 people.
Certain milestones in a person's life prompt major changes in buying patterns, whether that's becoming a new parent, moving homes, getting engaged, buying a car, or going through a divorce. Marketers are willing to pay more to reach consumers at those major life events. Knowing that a woman is expecting a baby and is in her second trimester of pregnancy, for instance, sends the price to tag for that information about her to $0.11.
The more intimate the information, the more valuable it is. Some of the most personal and secretive troves of data rank as the most expensive. For $0.26 per person, buyers can access lists of people with specific health conditions or taking certain prescriptions.
However, even adding those details up, the sum total for most individuals often is less than a dollar.
"On an individual level, there is almost no economic value," says Dave Morgan, a digital ad industry veteran who founded one of the first online ads targeting companies that tapped web surfing data to show personalized ads to people who were likely to be interested in the product or service.
The sheer ubiquity of details about hundreds of millions of consumers is responsible for driving down prices. Digital advertisers' profiles of people already include specific information, such as whether a person purchases weight-loss supplements, has a net worth of more than $1-million, and suffers from seasonal allergies. These details are fed into sophisticated algorithms that dictate what ads to serve up to consumers.
The buyers are therefore less willing to pay the dozens, if not hundreds, of competing data tracking companies for individual bits of information unless they are certain it will drive a profit. That leaves tracking companies scouring for ever more detailed information in hopes it will prove to be valuable.
"Everybody has this idea that these companies are making billions of dollars on individuals' data. That's just not true," Mr Morgan says.