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June 22, 2009, 1:02 p.m.

CircLabs’ Bill Densmore on tracking readers’ habits to build new revenue streams for news organizations

CircLabs, the hard-to-describe startup that aims to create new revenue streams for news sites, has detailed a little more about its plans. And Martin Langeveld, who’s involved in the project, has written more about it too. (You know Martin from his writings here.) Their initial product, Circulate, seems to be a browser plugin that tracks your browsing patterns and information you give it to recommend content you might like. CircLabs promises publishers a variety of potential revenue streams off that model, including the ability to use Circulate as a pay wall or a micropayments engine.

CircLabs is an offshoot of the work Bill Densmore did on what he called the Information Valet Project as a fellow at the Donald W. Reynolds Journalism Institute at the University of Missouri. I talked with Bill a couple months ago about his work on IVP; the video of our conversation is above. While IVP covered a broader set of ideas than Circulate does, I think it helps explain what the new project is all about. Full transcript below.

Joshua Benton: We’re here today with Bill Densmore, who is going to talk to us about the Information Valet project, which has been taking up a lot of his time and energy recently. Thanks for coming here, we appreciate it. For the folks who haven’t heard of it, what exactly is the Information Valet idea?

Bill Densmore: It’s a project that is being supported as part of my fellowship at the Donald W. Reynolds Journalism Institute at the Missouri School of Journalism. And it’s an effort to rally the news and information-services industries around a non-profit collaborative to create a shared user network for Internet information commerce and privacy protection.

The idea is that a consumer would have an account at a most trusted Information Valet — like a newspaper, like a bank, like their ISP, like their cell phone provider, or an affinity group — and they would profile themselves, share information about themselves, with that Information Valet. And then working with that Information Valet, they would decide how and when that information about themselves is used across the web.

That’s in contrast to the way the web works now, which is that at each successive website you go to, they — if they are in a marketing mode — try to collect information about you. Usually inferentially — that is to say, what did you click on? Then they slice and dice that in very sophisticated ways. And they use that to decide what to serve you when. And as a result, there are sort of bread crumbs of information about all of us all about the web now, at lots of different websites. The idea behind the Information Valet project — which I should say really appreciates and draws on a lot of the thinking of the VRM project at the Berkman [Center] here at Harvard — the idea behind the Information Valet is to create a new approach to managing your persona on the web, so that you can decide when and how you share that information — and you can get value for it.

So, in the Information Valet network, you will arrive at a web site, and that web site will be able to selectively get information about you, if you’re willing to share it. That allows for a very customized process of whatever it is you want. Now, in some cases — we think of this as a value-exchange network. In some cases you might want to use that to be compensated for having looked at an ad or sponsored material. Or you might be rewarded with some kind of coupon or something. The other side of the coin is it could be used to give you subscription access to valuable information, or to be able to pay for a music or video download. The mind starts to spin about the possibilities once you have this trusted value-sharing network in place, which is respecting your privacy and allowing you to value your privacy, which is allowing you to chose your most trusted Information Valet — and if you don’t like your Information Valet today, you can switch and go to a different one — allowing you to selectively decide on a session basis whether you want to share all of your demographic information or some of it or none of it.

So, that’s the idea — is to change the paradigm of how we and the news industry manage our relationships with our users, so that it’s a service that we are providing rather than a product. In other words, it’s no longer this print product — it’s no longer even necessarily this web product. It’s about helping you manage your relationships on the web. In a short hand, I think of this as a news social network.

Josh: So let’s walk through how this might work. Let’s start with: Let’s say I’m a resident of Boston, I’m interested in joining up for this project, and I want to sign up with The Boston Globe. The information that I would be asked in that process — I presume for it to have value, it would have to go significantly beyond “I’m a 33-year-old white male with a certain income level and a certain education level.” Are you considering this as getting into, “And I like Cajun music, and I like Indian food but I’m not so big on Thai” — how much information would you be asking for?

Bill: Well, I’m going to give an answer that seems sort of squirrelly, but the reason for giving this answer is because the nature of the idea. I guess I would say that depends on your relationship with The Boston Globe or, and what sort of application you and they decide in parallel with each other that you want to make of the service. If you are really interested in getting a free service on the web, and you share a lot of information yourself — including some of the kind of things you mentioned a minute ago — it’s likely in a fully deployed world, Information Valet world, that you would be able to get a lot of your information jobs done on the web for free as you do today.

On the other hand, if you want really special premium information and you don’t really want to share much about yourself, then that might be part of a subscription package that the Globe might offer you. But uniquely it wouldn’t be just a subscription to the Globe — it would be a subscription to a whole array of products and services that the Globe can assemble for you across the web among all of these participating Information Valet websites.

Josh: So would you view this ever, for a news organization, as the determining factor about whether someone has access to news? I mean, in the old model, the determining factor was whether you bought a newspaper, whether you paid for it. Whereas the new model is if you can type in the web address, you can get the news. Would you anticipate that news organizations would make this the cut point — that we will only give you free access to and the news that we provide now if you join this project and give us this demographic information?

Bill: I think that there’s always going to be a very substantial portion of the web — and particularly the news web — that’s going to be open and free to anybody. I think that, over time, there will be an evolution that will occur, where there will be some resources that we might think of today as news, but they might be much more enhanced — in terms of the level of personalization and the depth of the information. Where a Boston Globe might say, that the value proposition might be: Yes, you can have access to all this stuff, but we’d like to know, we’d like to ask you to share some information about you to go along with it, to help us defray the cost of providing that service — because that way we can make a little money and you can make a little money from marketers. But the important thing is that it’s entirely transparent. That is to say, you decide how your stuff is used, you decide who gets it and how it’s retained. And you decide how to value it.

Josh: What lessons would you take from the experiences that — for this idea — from the experiences that news organizations, particularly newspapers, have had in the past few years about requiring registration to view beyond the front page of websites? I think there was a study that came out a month or so ago saying that that practice has declined and that most news organizations are more willing to say, “Here have it — we’re not going to demand this information.” Are there lessons from that experience that apply to this idea?

Bill: I think there definitely are. I think if you put up a pay wall or a registration wall — in the sense of Wall, capital W — that that’s a non-starter in today’s web. But I think — imagine if you will if a newspaper sent a letter to all their print subscribers one day saying: We’d like to introduce you to the opportunity to be part of a valuable new service that we are offering all of our print subscribers. It’s free and if you want to do it, all you have to go do is go to this particular unique URL that’s in this letter and click on it, and we will connect it with your paid subscription and that’s it. And you’ll be part of the system. And so that’s it the first day.

Now maybe a couple months later you are going to do something on the web and you get a popup that says, you know, you could get an enhanced information service, if you would like, if you would take a few minutes and give us, you know, check through some boxes here about some personal preferences you have and information. Now is that registration? I don’t know. I think the word registration becomes a misnomer here. I think what we’re talking about is an iterative process, where gradually the Information Valet invites you to say more about yourself. And over time that allows an increasingly customized experience in which in some cases you may actually be compensated for what you do. And in other cases you may have the opportunity to pay for something that you really want that you won’t otherwise have access to.

Josh: In your aspirations for this, what is the scale you would hope to or like to achieve? I ask that because when you talk about the ability to protect one’s privacy as one of the key benefits, that ability is only useful insofar as the network you’re describing is large enough to encompass a lot of the behavior that you do. If Amazon’s not involved in this network, then you have a completely different separate relationship regarding your privacy with Amazon than you do with this network. So how big would this have to be to be effective in this way, or how big would you like it to be?

Bill: Well, it needs to be big within at least one vertical niche in order for it to have value. One of the challenges about networks, technology networks, is that they don’t have value unless they are at scale. And so how do you — there’s a chicken-or-the-egg problem. I’ve sometimes said that solving this problem is the basis of a book which would be called “Cracking the Chicken.” Because I don’t know — it’s a real challenge to figure out how do you raise the souffle where, on the one hand, you’ve got the users, and you’ve got the people with valuable information that either they want to sell or they want to pay you to look at. How do you get them all to — poof! — one day agree to be part of a network?

This is not a technical challenge. This is a missionary challenge, really — to convince a lot of consumers through their Information Valets and a lot of advertisers and information-service providers that there’s an everybody-wins scenario if folks buy into this idea and move on it.

One of the things that I think is exciting, though, is that the news industry has upwards of 50 million people who pay on a regular basis for information. There’s very few other entities — and that’s in the U.S. alone — there’s very few other information-service entities that you can say that about. I guess you can say that about the cell-phone industry, but really I’m not sure that people yet perceive that as buying information — they think they’re buying connectivity. I think over time people will see that as buying information. I suppose you could say that that might be true to some degree of the cable-television industry, but here again I think people initially thought they were buying connectivity and only now they’ve started to see that that’s actually an information service. Well, the news industry is a pure play — people who buy information. And so I think the opportunity exists, if the news industry makes independent judgments to be part of a system like this, to create a network overnight.

Josh: And then, of course, one of the benefits — one of the relatively few benefits of chain ownership, in that if you convince one guy at Gannett, you could have a whole bunch of newspapers at the same time.

Bill: Well, I think it’s important that each entity who would join a system like this makes an independent judgment to do so, because everything about it needs to be a free market for information. The individual players need to be able to set their own pricing, to be able to set all of their business rules. The only thing that I think needs to be absolute is the confirmation to the user that they own their personal information and that is important.

Josh: I mentioned the lessons learned from registration policies. There have also been previous attempts for news organizations around the country to unite and cooperate in a variety of ways, from New Century Networks to partnerships with Yahoo or Quadrant One and others. Are there — at least with the new ones, we’ll see how Yahoo and Quadrant One work out — the previous generations and iterations haven’t worked out all that well. Are there lessons that you can draw from that experience about why those efforts in the ’90s to create national ad-sharing systems weren’t as successful?

Bill: Well, I think that the New Century Network — which, as you know, was a collaborative, a for-profit collaborative of the what were then, I think, the six largest newspaper chains in the mid ’90s — I think that was a useful vision at its start. And I think where it got bogged down was over challenges about ownership and control, and over challenges about how to build out the vision from a technological point of view. I don’t think the notion of a cooperative arrangement among the nation’s news organizations to give consumers access to a range of information in a very simple one-ID, one-account kind of way — I think that was fundamentally a very good idea. I just think that the implementation was challenged. And I think that with the benefit of hindsight, there’s some really good lessons we learned from that that don’t need to be repeated.

Josh: So how far along are we in this process? What is the point at which I, or someone listening, will be able to go to a website and see how this is functionally working? If everything goes as you would like it to, what is the point at which this one-day turn-on of the network would happen?

Bill: I think we’re certainly at least a year away from flipping the switch. And I think that that’s probably a bit optimistic. I think that’s a good goal to have. I think it will be a few months before we can have a pretty demo of what a consumer might expect to see. But really, if you think about it, the key work that needs to be done at this stage is not with the consumer. It’s with the folks who have important — who have valuable information that they either want to sell or present to consumers, and the folks who have relationships with consumers who are disposed to believe that information has value. Those are the entities that need to be aware of this opportunity and become part of it.

Josh: All right. Well, thanks very much, Bill. I appreciate it.

Bill: Thanks for having me in and giving us the chance to talk about it.

POSTED     June 22, 2009, 1:02 p.m.
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