The episode underscored the power of the Web technology to collect vast detail about millions of consumers.
THE WASHINGTON POST
"The Microsoft File: The Secret Case Against Bill Gates" is a bestseller among Microsoft employees. At MCI WorldCom, they're buying "The Electronic Day Trader." At the Library of Congress, "Gary Null's Ultimate Anti-Aging Program" is a hit. And at National Semiconductor, it's not just circuits: "101 Nights of Grrreat Sex" is on the company's Top 10 list. All of this information is revealed by the online bookseller Amazon.com, which has started featuring thousands of individual bestseller lists calculated by Zip codes, workplaces and colleges -- wherever its customers are ordering from. With a simple mouse click on the company's World Wide Web site, you can peek behind the scenes at the books that specific groups are reading as well as the compact discs they're listening to and the videos they're watching.
Amazon describes it as "fun" -- and happily announced the feature in a press release last week that was followed by a number of media reports. Late yesterday, however, citing complaints from customers, the company began backtracking. Customers can now opt out of having their data collected, as long as they're savvy enough to read the fine print and send an e-mail to the company. By sending a fax, companies can also choose not to be included.
If you work for the Federal Deposit Insurance Corp. and want to buy a copy of the CD "Zoot Suit Riot: The Swingin' Hits of the Cherry Poppin' Daddies" -- and apparently many employees there do -- you will no longer have it chalked up statistically for all the world to see.
The episode underscored again the power of Web technology to collect vast detail about the likes, dislikes and buying habits of millions of consumers and zoom in on the data in ways unprecedented in the annals of marketing.
"We're taking chances, we're innovating here," said Amazon spokesman Paul Capelli. "This program is building community and adding a unique feature that never could have existed before the Internet."
The chief executive of the trade group to which Amazon belongs, the American Booksellers Association, had a different view. "This is outrageous," said Avin Mark Domnitz. "One of the things that people are afraid of with computers is that they are so powerful, [that] they collect extraordinary amounts of information about individuals. We could create an environment where people are afraid to go online."
Domnitz's remarks were echoed by leading independent booksellers, who never were among Amazon's great fans. "It's just one more step along the road to a complete loss of privacy for consumers," said Bill Petrocelli of Book Passage in Corte Madera, Calif.
Andy Ross of Cody's, a large Berkeley store, said: "It's like 1984 has arrived. What people are reading, thinking about, the ideas they're working with, should be completely confidential, but with Amazon they're not."
No one interviewed yesterday was particularly bothered by Amazon compiling lists by individual Zip codes -- that's just a more specialized version of the national and regional lists that have been a feature of the book trade for decades. The concern was instead over the hundreds of lists specific to individual corporations, colleges and universities, and a sprinkling of nonprofit groups and government institutions.
"You can't say there isn't a privacy invasion here," said Robert Biggerstaff of the National Association Mandating Equitable Databases, a consumer group. "It's not traced back to the individual, but they are invading the privacy of the company.
"It's unfair to the company to identify their employees as having these particular reading tastes, and it's risky for the employees, who might be buying a book that causes them to receive scrutiny from their employer," Biggerstaff added.
Sophisticated software that remembers and correlates such specific customer information as Zip code, e-mail address, subjects searched for, purchases made for oneself and purchases for others -- essentially every move you make on a Web site -- is what permits Amazon and other Internet companies to engage in what is known as "data mining."
The Internet commerce industry generally sees it as the road to greater personalization in marketing -- in the interest of both buyer and seller.
Amazon said its point in publishing the lists, besides "fun," is to help consumers buy more books and tapes. "If you realize that everyone around you is buying a certain book or CD, you might think, 'Maybe I'll get this too,' " said Capelli.
Or, he added, if your niece is going to New York University and you didn't know what book to give her, you could look at the list of NYU bestsellers and get her, say, "Mergers, Acquisitions and Corporate Restructurings."
Critics, though, see it as the road to trouble. "We have to be extremely concerned where this is going to lead," said Judith Krug, director of the Office for Intellectual Freedom of the American Library Association.
Donna Hoffman, co-director of the electronic-commerce center at Vanderbilt University, agreed: "It could get pretty scary, depending on where you live, work and go to school. These lists might begin to define interests most people would prefer to keep private," such as, for instance, sexual tastes.
The Amazon program, called Purchase Circles, is "a clever tool, but it has very dark privacy implications," Hoffman said. "If I come up with better tools to attract you to my Web site, I can learn more about you. The more I can personalize my site for you, the more I can customize my offering, the more interesting it will be to you. Amazon is showing the power of mining the database."
Mining the database of its 10 million customers is where many observers believe Amazon is headed. Since it's so easy to compare prices on the Web, many consumer goods are sold near or at cost. Instead of making a profit, e-commerce companies are concentrating now on serving as many customers as possible. The money, they believe, will come later, when they can be full-service destinations for all shopping needs.
Amazon recently reworked its Web site so customers looking for new books by an particular author are also told what is available by him at the firm's auction and video sites. If you order a dog-care book, they try to sell you pet food.
The combinations are infinite, and so is the amount of money that can be made. It's why Amazon, which has never made a profit and shows no sign of doing so in the immediate future, is a Wall Street darling.
How happily consumers will come along for the ride is still undecided. "Amazon is really pushing the envelope here," said Vanderbilt's Hoffman. "It would be hard to find a consumer that didn't think this new idea was cute and entertaining. But consumers are also going to say, 'I didn't know they were doing that with my data. I didn't even know I gave them permission to do that.' This raises the awareness of the privacy issue much higher."
Whether Amazon intended to do that is another matter.
"One of the big question marks surrounding electronic commerce is privacy, and the lack of confidence that many potential customers have about transacting [business] online," said David Sobel, general counsel of the Electronic Privacy Information Center.
"It doesn't seem like a good business decision to do something that highlights your collection of customer profiles," he added. "It throws fuel on the fire."
Amazon's slight change of heart yesterday may help to quell a few of the privacy fears, but it also will render the bestseller lists largely useless, because readers will never know what percentage of book buyers at a company or college have opted out. Amazon spokesman Capelli conceded that the surveys are "not scientifically valid."
Many of the books, CDs and videotapes that are popular at a company or institution are the same ones that everyone everywhere is buying. But some reveal the particular tastes of the groups involved.
For example, while the impeachment of President Clinton might be a receding memory everywhere else in America, Senate staffers are still buying Chief Justice William H. Rehnquist's "Grand Inquests: The Historic Impeachments of Justice Samuel Chase and President Andrew Johnson." At No. 5, it's outselling Bob Woodward's "Shadow," a much more recent political book that is a much bigger seller nationally.
Similarly, it might come as a surprise to some that the most popular musician among customers from the military is ethereal mystic Loreena McKennitt, whose CDs hold the No. 1 and No. 3 spots.
Companies and institutions contacted about their Amazon bestseller lists declined to comment. The exception was National Semiconductor, where spokesman Bill Callahan said the popularity of a sex manual didn't mean it was a particularly swinging place.
"I've noticed nothing, and I've been here 15 years," said Callahan. "This has always seemed like a pretty typical run-of-the-mill high-tech company."
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