Banks Cashing In On Data

If a person's primary method of payment is some type of credit or debit card, the banks know everywhere that person goes, what they spend their money on, what their preferences are, what locations they frequent and so on.

Selling that data is an interesting method of making money for banks. Federal regulations are strict on what customer data banks can share and with what entities. According to the Tribune story, the bank's system is set up in such a way that the deals are coming from the bank, not from the merchant. Data is processed between the merchants and the banks through intermediaries, such as Cartera or Cardlytics. Personally identifiable information is randomized and customers are given numeric codes, of which only the bank will know who the user truly is.

According to the Tribune, 58% of customers have redeemed at least one deal. The incentive programs are opt-out, which 2% of customers have chosen to do. Merchant funded incentive programs could be a $1.7 billion vertical for the banking industry by 2015, even with the banks only taking 25% of the fee for the incentive.

Privacy, Data, Money = Advantage Banks

Opt-in or opt-out is a tricky question when it comes to data and privacy. Companies like Facebook have gotten into hot water with privacy advocates by making changes to their privacy policy and settings opt-out in a way or place that a lot of users will not notice or check. Think of it this way - are you getting offers from your bank? Did you remember the bank asking you if it could share your information or was it in the fine print of your cardholder's agreement somewhere?

When it comes to the Internet, money is inextricably tied to user data. The companies with the most data about their users tend to make the most money. Banks are the perfect avenue for incentivized deals because they can offer merchants exactly what they are looking for.

For instance, a 29-year-old male with an income above $40,000 that purchases shoes three times a year would be a perfect target for a deal from Designer Shoe Warehouse or Footlocker. Groupon cannot give merchants that level of granular information.

What will this mean for the fledgling daily deals industry going forward? Groupon had a litany of risk factors in its filing for its initial public offering and "inability to stave off competition and clones" was one of them. Facebook and Google are secondary players in this market. Both have created various types of deals and "offer" campaigns, and they both pose a problem to the primary players since they already have significant amounts of user data.

Yet, the banks have more information about customers than any Internet company ever could. If the financial industry starts muscling into deals, do the likes of Groupon and LivingSocial stand a chance?

American-Statesman: Suspect Position, Bad Example, Another Bad Example, Debunked Statistics, Contradiction

from the so-much-silly dept

Most of the time the articles we take issue with at Techdirt have something in them we disagree with or find silly. And by something, I mean to indicate that there's a singular wrong in there that we point out. Or, at most, a couple of wrongs. But sometimes you encounter a piece written for a supposedly reputable publication that seems so much as though it was written to be completely wrong, that I start to wonder if LulzSec has begun infiltrating the mainstream press. Take this American-Statesman article by Gary Dinges piece by piece for an example of what I'm talking about:

"Months and months of hard work available for illegal downloading free of charge in a matter of minutes. That's the difficulty facing authors, filmmakers and musicians across the nation, costing them untold sums of money each year."

Well, gee, Gary, that sounds positively terrifying. It must be hard on these creators who are clearly in horrific dire straits. Care to share an example?

"It has become rampant," said Sandra Brown, a Dallas-area author with 60 New York Times bestsellers. "I have an assistant — a real Internet guru — who spends the bulk of her time monitoring the Web."

Ah, got it....wait, what?!!? I just want to make sure I understand this completely. You're offering up a well-known author who is routinely on the best sellers list? In order to demonstrate the struggle of authors with regards to internet piracy? Maybe next you'd like to do a piece on the political glass ceiling of minorities in America and use Barack Obama as your prime example?

And here's another question: How bad has internet piracy made things for you when you have the resources to pay an assistant, a real internet guru no less, (whatever her salary is) to spend the majority of her time "monitoring the Web"? And what the hell does that even mean? And why are you doing it? I for one totally envy that internet "guru" getting a fat check to play Bejewelled all week then turn in a report saying "yup, the internet still exists".

Okay...vitriol aside, how can this possibly make sense economically? If we were able to get some concrete answer as to which ended up costing Sandra more (real, not potential) money overall, the evil and vengeful internet or the salary of her faithful assistant for "monitoring" it, which do you think it'd be?

But back to Dinges' article. He then offers us Dano Johnson, an animator who we learn has had his own battles with internet piracy. Apparently he animated a movie that ended up on YouTube and was viewed five thousand times or so before a DMCA takedown was issued. Dano's response?

"'I feel like I got robbed 5,000 times,' he said."

Well golly gee willickers, friend, sometimes I feel like a character from a Mel Brooks spoof movie, but feelings don't really mean a whole lot here, do they? The fact of the matter is that you weren't robbed five thousand times. I wonder how many of those folks who viewed the YouTube video would have done so if it weren't there to see for free to begin with? I wonder how many of them came across it for the first time when someone shared a link? I wonder if YouTube felt "robbed" for five thousand instances of promoting you at no cost? Did you pay YouTube for any of that? Book yourself, Dano (sorry, couldn't resist).

Now, after the article then goes on to quote all the billions and trillions of sweet American dollars that are being directly removed from the economy, ostensibly never to be seen again, we get back to the best line of the piece with one final quote from Dano Johnson on what effect piracy has had on his willingness to create his art:

"Piracy isn't going to make me want to stop making films."

Oh, sweet internet Gods, thank you for this. Piracy, while perhaps annoying, doesn't stop creation. And if you acknowledge that copyright is supposed to be an incentive to create, we arrive at the inevitable conclusion that nuclear options like ProtectIP, which is what this article was actually all about even though they didn't name the increasingly controversial bill by name, are not the answer.

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Monday, August 1, 2011

Making Money on Internet

Banks Cashing In On Data

Privacy, Data, Money = Advantage Banks

American-Statesman: Suspect Position, Bad Example, Another Bad Example, Debunked Statistics, Contradiction

from the so-much-silly dept

Morning <b>News</b> | Slog

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Newsbeat, Chartbeat's <b>news</b>-focused analytics tool, places its bets <b>...</b>

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Monday, August 1, 2011

Making Money on Internet

Banks Cashing In On Data

Privacy, Data, Money = Advantage Banks

American-Statesman: Suspect Position, Bad Example, Another Bad Example, Debunked Statistics, Contradiction

from the so-much-silly dept

Morning <b>News</b> | Slog

<b>News</b> | Six Clicks - StyleList

Newsbeat, Chartbeat&#39;s <b>news</b>-focused analytics tool, places its bets <b>...</b>

No comments:

Post a Comment

Newsbeat, Chartbeat's <b>news</b>-focused analytics tool, places its bets <b>...</b>