The EchoMetrix settlement (with the NY Attorney General – Andrew Cuomo no less) is a case where the equities (and the law:  Children's Online Privacy Protection Act of 1998) seem so clear that the outcome was inevitable, but I wonder if in the end this augers poorly for the marketing industry.  The gist of the case is that EchoMetrix sells software that helps parents monitor their children's use of the Internet.  In the course of providing this service, EchoMetrix gathered data from the children's Internet use.  They then sold the data to companies who, apparently, used it for marketing.  The data may have been anonymous but may not have been.  See the original complaint filed by the Electronic Privacy Information Center, and they did all this without consent (or probably, knowledge) of the parents. 

Certainly the case is sympathetic -- using information gathered from children without parental consent!  What were they thinking?  Shades of big brother.  On these facts, it is hard to imagine anything other than a fine and a cease and desist.

Having said that and at the risk of stating the obvious, there is a vast universe of this kind of data in the stored world of social media, old emails, old searches and whatnot.  That universe has huge value to advertisers and marketers (to say nothing about all other manner of research).  To the extent that that value can be tapped it will pay for a lot of net content and services. 

My guess is that there are many people who have a negative visceral reaction to the use of this kind of online data.  My guess is also that there are a lot of companies that are not capitalizing on this kind of information (at least to the extent that they could) for fear of what Andrew Cuomo (or his equivalent) will do about it.  All this may be good so far because it causes people to tread lightly in a sensitive space. 

Then there is the other perspective:  Better quality marketing and advertising has a value to the marketer/advertiser (no doubt) but also to the recipient.  Again, at the risk of stating the obvious, they inform me about products and services that I might actually want instead of taking time and mindshare plugging things I could care less about.

And here is another perspective:  To the extent that this kind of information creates value (and profits) it supports the free internet.  For this reason alone, I think this kind of data will become generally available to anyone who wants it.  That does not make the big brother aspect less scary.  And this leads to the point I really want to make:  Clear sensible rules that protect online identity and set appropriate standards for mining online data will make people comfortable (I hope) with the scary big brother aspect of all this and will create real value that will redound to everyone’s benefit. 

Clear rules will expand the network and, per Metcalfe’s law, generate real value for everyone.