Page 329 - DMGT308_CUSTOMER_RELATIONSHIP_MANAGEMENT

Customer Relationship Management

Notes This particular legal policy seems quite attractive: assign a property right in information about
an individual to that individual, but then allow contracts to be written that would allow that
information to be used for limited times and specified purposes. In particular, information
about an individual could not be resold, or provided to third parties, without that individual’s
explicit agreement.
This idea appears to have been most thoroughly explored by [Laudon, 1996]. He goes further
than simple contracting and suggests that one might sell property rights in personal information
on markets. As Laudon points out, there is already a large market in personal information. But
the property rights are held by those who collect and compile information about individuals –
not by the individuals themselves. These third parties buy and sell information that can impose
costs on those individuals, without the individuals being directly involved in the transactions.
In economic terminology, there is an externality.
The personal information industry in the US is primarily self-regulated, based on the so-called
Fair Information Practices.

 There shall be no personal record systems whose existence is secret;
 Individuals have rights of access, inspection, review, and amendment to systems containing
information about them;
 There must be a way for individuals to prevent the use of information about themselves
gathered for one purpose for another purpose without their consent;
 Organizations and managers of systems are responsible for the damage done by systems
for their reliability and security;

 Governments have the right to intervene in the information relationships among private
parties.
The European Community has more explicit privacy regulation; for more on international

regulations, see the Electronic Privacy Information Center’s web page on International Privacy
Standards.
It is worth observing that the Fair Information Practices Principles would automatically be
implemented if the property rights in individual information resided solely with those
individuals: secret information archives would be illegal; individuals could demand the right of
review before allowing information about themselves to be used; and those who wanted to
utilize individual information would have to explicitly request that right from the individual in
question or an agent acting on his behalf.
Laudon goes on to propose that pieces of individual information could be aggregated into
bundles that would be leased on a public market he refers to as the National Information
Market.

Example: An individual might provide information about himself to a company that
aggregates it with 999 other individuals with similar demographic and marketing characteristics.
Such groups could be described by titles such as “20-30 year old males in California who are
interested computers,” or “20-30 year old married couples interested in home purchase.”

Those who wanted to sell to such groups could purchase rights to use these mailing lists for
limited periods of time. The payments they made would flow back to the individual users as
“dividends.” Individuals who found the annoyance cost of being on such lists greater than the
financial compensation could remove their names. Individuals who felt appropriately
compensated could remain on the lists.
Although there are many practical details of implementation that would need to be solved to
implement Lauder’s market, it is important to recognize that information about individuals is

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