What is the Value of Online Privacy?

Many people worry about what companies will do with all the data they are collecting on web behavior. Virtually every major website is keeping tabs your behavior through a variety of tags and various web analytics and tracking technology. Most are just tracking your actions on their site, but more and more companies are coming up with new innovative ways to track your behavior as you cross web domains, principally through the use of tracking cookies.

A recent Wall Street Journal article examining the 50 most popular US websites comments on the fact that many top internet firms aren’t even aware that 3rd party vendors are using their site to place such code on your computer. These 50 sites collectively placed over 3000 tracking files on a test computer with over 2/3rd of those files installed by 131 other companies “many of which are in the business of tracking Web users to create rich databases of consumer profiles that can be sold”.

Companies will claim that this monitoring is the price we pay for free services on the internet. Basic economics state this is not the case.

Companies have the ability to make a buck based on your work and are seizing it without even a thought towards compensating you for you data. Many don’t even ask for you permission and some have developed new flash-based cookies that redeploy themselves even after you have deleted them. At least supermarket, department and other big box stores have to ask, if you want to sign up for their “preferred customer tracking cards” and then use incentives to use them each time.

Since the data carries no value to a consumer, tremendous value to marketers and there is little harm in sharing, I say compensate consumers for their data. This practice is common place in surveys and study groups. All I’m saying is you should get your 1/10th of a penny.

$200 to Fly, $400 More to Bring Your Bag

Airline after airline is approaching bankruptcy only to be rescued by another airline. At the announcement of most of these mergers the airline proudly proclaims that they will be taking the best of both airlines and making one new better airline. In reality most of these mergers were done for two reasons. The airline wanted to buy more gates and reduce competition in its more profitable markets.

The major airlines do everything they can to manipulate the supply of seats from one city to another. Another way they accomplish this is by treating a seat on a flight differently for those flying direct than for those flying a connection. Same plane, same seat different cost. In many cases it’s pay more get less.

An example: To fly direct from LGA (New York) to DTW (Detroit) on a flight tomorrow the lowest fare on a major airline is $585. However, for flights on the same day you can fly to MCO (Orlando) for $215. What is incredibly interesting is that the $215 to MCO is a connecting flight which stops in DTW. By spending an extra $370 you get a seat on the same plane from LGA to DTW but you give up the seat from DTW to MCO and gain the right to check bags. You thought $30 to check a bag was a steep price. Keep in mind you could already be paying over $300 for that ability.

I’m a huge proponent of analytic based pricing; it’s what I do for a living. But, somewhere along the way airlines allowed computer pricing to take over and common sense went out the window. Then again if consumers want to complain they need to use the power of the purse. Next time you fly see if you can’t get less for more.