A STEP TOO FAR?
(Note: Re-published from an earlier draft. Original post was lost in Typepad)
There seems to be a pre-dominantly negative reaction on Techmeme today, to a new service offered by a startup called The Pudding. Here's the back-ground from the New York Times story:
"Companies like Google scan their e-mail users’ in-boxes to deliver ads related to those messages. Will people be as willing to let a company listen in on their phone conversations to do the same?
Pudding Media, a start-up based in San Jose, Calif., is introducing an Internet phone service today that will be supported by advertising related to what people are talking about in their calls. The Web-based phone service is similar to Skype’s online service — consumers plug a headset and a microphone into their computers, dial any phone number and chat away. But unlike Internet phone services that charge by the length of the calls, Pudding Media offers calling without any toll charges.
The trade-off is that Pudding Media is eavesdropping on phone calls in order to display ads on the screen that are related to the conversation. Voice recognition software monitors the calls, selects ads based on what it hears and pushes the ads to the subscriber’s computer screen while he or she is still talking."
The company is addressing the obvious privacy concerns in it's model:
"The company’s model, of course, raises questions about the line between target advertising and violation of privacy. Consumer-brand companies are increasingly trying to use data about people to deliver different ads to them based on their demographics and behavior online.
Pudding Media executives said that scanning the words used in phone calls was not substantially different from what Google does with e-mail.
Mr. Maislos said that Pudding Media had considered the privacy question carefully. The company is not keeping recordings or logs of the content of any phone calls, he said, so advertisements only relate to current calls, not past ones, and will only arrive during the call itself."
The reaction on Techmeme seems to be overwhelmingly negative. GigaOm's Om Malik had this representative post about the offering:
"Technology business often goes through periods where rationality and reality are suspended. We just might be in that phase, and nothing highlights that than the launch of ad-supported phone services.
In UK, Blyk, an ad-supported mobile service we wrote about eons ago launched. Given the high tariffs in Europe they might have a prayer of a chance, but don’t hold your breath.
Want to know what’s more stupid: this ad-supported experiment called The Pudding, which is getting a lot of attention. it is one of the more inane ideas out there, worse than say yet-another-social-bookmarking service.
Never mind, that over here calls are cheap enough that most of us don’t really want to put up with the extra steps to save a few pennies."
At
first blush, I had the same first reaction. One needs to mentally
filter the discussions around this issue for charged and provocative
words like "eavesdropping", "Big Brother", or "spies on your calls". Only then do the issues become more clear.
So on further thought, the whole thing seems a lot more plausible to me, both in terms of customer acceptance and from an economic perspective. Here are some initial thoughts:
1. PRIVACY CONCERNS: On a broad, philosophical level, we're less concerned about privacy online than ever before, for better or for worse.
This is yet another "logical" step in the progression of mainstream internet users trading privacy for convenience and functionality.
It may be a step down a pretty slippery
slope, but as the NY Times piece indicates, we've already accepted
something very similar in our web email services like Google Gmail, not
to mention in all our searches online.
In less than a generation, we've gone from freaking out over our privacy concerns regarding our social interactions, to letting it all hang out on social networks like MySpace, Facebook and the like. And much to our surprise and occasional consternation, older folks seem to be following younger adopters of these services, throwing traditional caution to the winds.
We've come to implicitly put aside privacy concerns, for the benefits and new functionality these new services offer.
2. SPOOKY TECHNOLOGY: That we can do this from a technological perspective is a given. The underlying capabilities here have been developed and fine-tuned by government security services in many countries including ours. In fact the founders in this case, have intelligence backgrounds in Israel.
We've also gotten used to the notion that our overseas wired and wireless calls may have been electronically monitored by national security services at various times in the past few decades, notwithstanding the recent attempts at domestic monitoring by the current US administration. And at various times, this has been accepted as a "good for our security" especially, when we've been scared by Cold War or terrorism threats.
So a private sector version of this service that offers tangible benefits to us as individuals, may not be as "freaky" as it first seems.
The Internet itself was initially developed for military purposes, not to mention technologies like GPS. As a society, we've gotten used to seeing these technologies migrate to the private sector and being massively commercialized.
3. THE SERVICE: What's particularly interesting about this service, is not the destination-based service the company is offering, but if the company worked aggressively with third-party websites large and small, carriers, ISPs, VOIP and media companies, to make this capability broadly available. Much like Tellme wdid with voice recgonition technologies a few years ago.
Whether Pudding does this or a bunch of other startups and/or internet incumbents, the technology is out of the bag. The question now if this can be made to work from a commercial and cultural perspective.
4. THE BUSINESS MODEL: While this technology doesn't seem to offer much of a price advantage over traditional WIRED internet phone calls (VOIP), there's a much more massive price umbrella on the wireless side, which COULD be exploited by an ad-based pricing supplement.
Wireless voice calls, which cost carriers pennies per minutes, are still being offered at prices that are ten times or more higher. That's a big pricing umbrella.
Initially, it may give the whole MVNO service providers an alternative way to monetize their services. Imagine if a service like Helio, or Virgin Mobile could offer much cheaper voice plans to supplement their current offerings. Or if pre-paid phones could bundle this ad-supported technology and thus offer much cheaper cell phone minutes.
The traditional wireless carriers would of course be loathe to experiment with something like this, because it could seriously disrupt their pricing models.
What if Google offered it's long-rumored GPhone with this capability? Would consumer trust and accept it since they already trust Google? It's not as crazy as it sounds. We know Google has long experimented with voice-recognition driven ad-delivery systems, starting with traditional radio.
A lot more needs to be thought through here, not to mention executed on by a whole range of companies.
But the initial idea is not as crazy as it first sounds. The Pudding may not be the first incarnation of this type of service that works, or even the second. But the underlying idea may see mass application and adoption in a very modified form, that may surprise us all.
IMHO.
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