**Amazon Policy Change Makes DM Sense

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Amazon.com remained under the scrutiny of privacy watchdogs this week as it sent e-mails to an undetermined number of customers announcing a change in its privacy policy.


Amazon announced late last month that it would notify customers of the change by e-mail.


"We have just updated Amazon.com's privacy policy and, because privacy is important, we wanted to e-mail you proactively in this case and not just update the policy on our site, as is the common Web practice," said the e-mail, which also gave customers an e-mail address to opt out of further e-mail notices, but no chance to opt out of the new policy.


Amazon claims it has 23 million customers.


The specific changes in the policy are unclear, since a copy of the old statement was not available and Amazon did not return multiple calls for comment. The new policy, however, says Amazon will share data with business partners, and that its customer database could be sold as an asset.


Meanwhile, the company scurried to fix a bug in one of its Web pages that exposed a number of e-mail addresses of its affiliate members. The bug has been acknowledged by Amazon officials and has been reportedly fixed.


While the change in Amazon's privacy policy has caused a stir among consumer advocates, direct marketers consider it a smart decision.


"It just makes good business sense," said database marketer Michael W. Paladini, senior vice president of quantitative services at Arnold Integrated Solutions, Boston. "Strategically and from a business policy perspective, it makes all the sense in the world for them to be doing what they're doing."


Traditional mailers have viewed customer files as their biggest assets for the past 30 to 40 years.


"Amazon is struggling to produce revenues, and they recognize that they have a tremendous asset that they've been sitting on for privacy reasons," said Ralph Drybrough, CEO of list firm MeritDirect, Stamford, CT.


What's more, acquisition costs for Amazon's customers have been conservatively estimated at about $50 each. If that is the case, Paladini said, Amazon spent more than $1 billion to build the file.


Regardless, privacy advocates are not pleased.


The policy compromises consumer privacy, said Andrew Shen, policy analyst at the Electronic Privacy Information Center, Washington.


"Telling customers that their information may be put on an auction block does not inspire confidence," he said.


However, Shen said he admires Amazon's honesty about the change and its explicit explanation in the new policy of what is done with customer information.


At least one direct marketer has reservations about Amazon's transition to the new privacy policy.


"You just can't send out a notification and say, 'That's it, we've done our duty,' " said Roy Schwedelson, CEO of Worldata/WebConnect, a direct marketing list firm and online ad services company in Boca Raton, FL. "As a leader of the online world, Amazon has to take responsibilities along with the accolades."


Schwedelson agreed that the new policy is a smart one and is fine for new visitors and customers at Amazon's site. However, he said Amazon should allow existing customers to opt out of the new policy.
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