Should Companies Sell Privacy Offsets?

It's time we were allowed to pay money for our privacy.

We already "pay" for our online services by looking at advertising that has been augmented with personal data gleaned from our Internet perambulations. Maybe it's time we formalized the value of users' data. Then, to opt out of tracking, users could simply pay the difference between what they're worth to service providers with and without their data attached.

It's not a tough calculation to make. Dr. Howard Beales, a George Washington University professor and a former director of the Bureau of Consumer Protection at the Federal Trade Commission, did just that in a paper earlier this year. He collected pricing data from a dozen ad networks that reached 75 percent of the US online population with the cooperation and funding of the Network Advertising Initiative. Dr. Beales found that the average cost per thousand behaviorally targeted ads on those networks last year was $4.12, more than double the $1.98 price of one thousand untargeted "run of network" ads.

We don't have an exact conversion of those numbers into how much you, yourself, would have to pay to have all your Google searches untracked, for example, but it's at least theoretically possible and probably would not be overwhelmingly expensive. Better yet, it's an opt-in service. Don't want to pay for the offset? Fine, keep using the service as you always have. The idea of letting people pay to opt out of ads is one that Google has in fact considered, according to a seven-page memo obtained by The Wall Street Journal today. (Granted it was labeled "wacky.")

Right now, consumers have a hard time opting out of tracking. As The Wall Street Journal pointed out in their "What They Know" series, only one of the top 50 most popular sites did not install any tracking files on a visitor's computer. All told, those 50 sites installed over 3,000 files. Some trackers, such as BlueKai, may let users see what they know about them and opt out of being tracked, but what's collected remains a mystery to many, if not most. Even if you understand the issue, you're probably too wedded to the companies' various services to stop using them.

Some users might welcome an untracked, paid alternative. How many? Respected venture capitalist Fred Wilson thinks there's actually money to be made in charging for privacy. Maybe so. But even if the vast majority of users don't buy the offsets, it wouldn't matter. What's important is that they exist as a viable alternative, so that the choice to continue using a free service would then shift from being a passive one to an active one.

Even if no one takes advantage of them, the offsets could still be a success as more users understand the nature and value of tracking.