Parsing Privacy from Publicity
In the second week of October 2020, the Privacy Co-op, a nonprofit Texas cooperative association, made headlines by paying dividends to its members. While there is nothing new about paying dividends, or even cooperatives, the idea of applying old-fashioned co-op law to the new world of data is catching some attention. And while there are many other businesses that already broker and sell copies of personal data in what some call an era of “surveillance capitalism,” these new co-op payments were not from selling members’ data.
At a time where tech billionaires are a dime-a-dozen, there is growing outcry over personal data. On the one hand, people are afraid that colossal companies, like Google, Facebook, and Apple, know too much about them, and on the other hand, they are angry at those getting rich off their data while all they get in return is a “free” cell phone GPS map.
Into this field of giga-Goliaths stepped an upstart digi-David called The Privacy Co-op — and their slingshot is warmed up and whirring over their heads.
“It’s really a simple premise,” said Mr. Glasgow. “People want easy controls to keep some things private, and an ability to profit from the things they’re OK with going public. Our sense of privacy is better secured in discerning the space between the two. In the US, privacy is a personal right protected at a federal level, but the right to publicity, which is really the control we’re after, is left up to the states, and may be better thought of as contractual. Meanwhile, businesses are realizing a serious threat to their profits from governments using these laws to scoop out billions in privacy regulatory fines that can be avoided with consumer consent — a contract. We meet both needs.”
By making that distinction between privacy and publicity law, the Privacy Co-op and other authorized agencies have found the ability to give their members new controls and provide businesses with a method to mitigate risk. In this way, the Privacy Co-op is bringing a new standard to the duty of care.
Mr. Glasgow continued, “We’ve all bought bubblegum trading cards, right? Well, if you got one with Michael Jordan’s picture on the front and his stats on the back, you can bet he was paid. That’s not privacy law, that’s publicity. Well, just like him, most of the data you’re worried about, the ‘indicia’ of your identity that are manifested by your activity with these companies, are like your likeness and stats on your own bubblegum card. And we think you should have the same controls and be compensated just like Mr. Jordan, who can pick who uses his indicia and gets paid for it. Those bubblegum card companies sleep well at night as does Mr. Jordan.”
Why would businesses not see that as a threat?
“All businesses have to support opt-outs if they’re going to use data for secondary purposes,” said George Crosby of MedStaffing, a founding affiliate of the Privacy Co-op. “Historically, it’s usually less than 1%. That’s a small consideration when you might get the other 99% to opt-in.”
“Pretty much all government privacy regulations allow for secondary uses [of data] if that company has your consent,” said Mr. Glasgow. “But businesses have a serious challenge gaining it.”
In 2015, a telecom company attempted to sell their new high-speed fiber service, which cost around $99 per month, at a discounted monthly rate of $70 if a customer opted-in to secondary data use. But at the time, the Wall Street Journal ran an article negatively casting that company as charging $29 per month for privacy. With the negative press, the telecom pulled the plug on the product discount altogether.
“We bring something new to the table,” continued Mr. Glasgow, “we’re a nonprofit advocacy group, owned by our members. We carefully manage our members’ affirmative express consent to license the use of their data as an opt-in as long as businesses agree to the terms and conditions that collectively our members want, which puts the members in better control of their own information rights. Businesses love it because they mitigate the risk from many severe government regulations and our members love it because we’re on their side providing them with control, guardianship, and much deserved payment.”
While their member role swells, the Privacy Co-op is rapidly signing up a growing list of affiliates from a surprisingly diverse list of industries, and not just tech. “We have affiliates that are in the medical and legal industries, gaming, and even publishing,” Mr. Glasgow said. “One of our most popular outings this year was exhibiting at a Hemp Convention where we gained affiliate interest from large and small agricultural businesses as well as new members from individuals attending. All industries are feeling the pressure for secondary data use and all people are getting fed up with data exploitation.”
The Privacy Co-op bridges the gap by charging a one-time $25 fee to become a lifetime member (even less through some affiliates), which gains for each member an equal share in the co-op that has as a goal to pay an average of 18% back on that investment with each dividend. They far exceeded that goal with this latest dividend.
“We were pleasantly surprised when we ran the numbers, but as a nonprofit we are required to distribute all leftover income as dividends to our members. This go-around, after meeting our budgetary requirements and legal fees, we managed to allocate $28.45 to each member,” said Mr. Glasgow
That is more than the original cost of membership to existing members at that time. While he cautioned there is no way to predict future earnings, it is not a stretch that affiliate growth in this exciting new market might outpace membership, which could mean even larger dividends through the next growth cycle. This makes for a healthy new marketplace that will draw competition.
There is already a growing list of privacy cooperatives, known in many privacy regulations as “authorized agencies.” Famously, 2020 Presidential Candidate, Andrew Yang, after suspending his campaign, launched one called Data Dividend Project. According to their website, they also hope to pay out dividends as well, and say that their members should expect to “hear from us sometime in September”. While this date may have passed without any mention of payment yet on their website, the Data Dividend Project looks poised to be on the same quest as the Privacy Co-op.
“There may be other privacy co-ops, but we’re the only one called The Privacy Co-op,” Mr. Glasgow said with a wry smile about the flagship. “We’re excited to see Andrew joining us and other authorized agencies. His fame is naturally a boost to our already vibrant marketplace and we certainly saw an uptick in interest when he launched.”
For now, the Privacy Co-op seems content with breaking records for licensing and class action participation, and has their sites set on even more in the years to come.