Panel Reviews Music Industry's Data Use

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LOS ANGELES - Marketers must realize that the opportunities provided by online technologies for the collection and subsequent sale of customer data could ultimately cause a consumer backlash, said attendees at a privacy panel discussion here this month hosted by the National Association of Record Industry Professionals and the Electronic Frontier Foundation.


Wendy Schlesinger, vice president of marketing for BMG Distribution, said that while most consumers are unaware of just how vulnerable they are to being profiled, eventually they will become aware and may potentially be very angry. Though data collection in the music industry is nothing new, she predicts that the Internet is not only paving the way for a dramatic change in the way retailers approach their customers, but it's also opening the door for potential misuse of the music buyers' private information.


"Anytime you use your credit card [whether on the Web or in a record store] someone collects your data. But what you don't know is how it will ultimately be used," said Schlesinger.


While customers may approve of some of the one-to-one marketing practices that are implemented with this data - such as recommending titles of artists similar to ones recently purchased - there is the possibility of the data being abused. For example, it could be sold to another company that then inundates the customer with unwanted junk e-mail or spam.


The customer's data isn't confined to the seller either; it's also accessible to any organization that the seller partners with (for promotions, contests, etc.)


In a real sense, consumer data on the Internet has become a commodity that is bartered and sold between companies. Every customer should decide whether they want to be solicited online, Schlesinger said. This choice should be spelled out when the customer fills out any transaction online and should be passed along if the data is bartered, purchased, exchanged or received in some other manner.


Consumer data can now be distributed and made available more readily today because of the Internet. With information and e-commerce merging, and without appropriate safeguards, music corporations have the opportunity to improve their direct marketing efforts, but at the expense of consumers' personal privacy rights.


The overall consensus of the panel members was that the potential for abuse of consumers' private information is definitely present and the responsibility lies with the music industry to band together to find a solution or face a problem of epidemic proportion.


While it's impossible to prevent some data collection, Schlesinger said, businesses need to realize the possible damage that data sharing can have on the customer relationship.


"As the Internet evolves, so too will the distinctions with what is considered legal data gathering vs. what is illegal data gathering," she said, adding that in the end, businesses will build successful one-to-one relationships using the data in a way that respects the customers' personal privacy.
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