Can Consumers Trust Businesses To Protect Their Privacy?
In today’s digital world, our private information is at a greater risk than ever before. The Director of the Institute for Communication Technology Management at USC explains how corporations will try to win people’s trust.
Interview by Kareem Maddox
Q. What do you think of Microsoft closing XBOX Entertainment Studios, and is that a blow to content creators looking for new avenues to operate?
A. I think the background on this is that there are more and more avenues to get to the consumer. I mean the internet brought that on. What happened was, new devices got into the fray for the new content, and they were all fighting to establish a role for their kinds of device in that evolving ecosystem. And Microsoft was right in there. I think they saw the change going on and they saw the opportunity. But what some of our research at the CTM institute has shown is that the amount of information going into the houses is going up pretty dramatically, but people’s attention really isn’t. Your ability to absorb information is relatively constant so people start multitasking, because you’ve got all this stuff coming at you. In fact, I think the number that we were measuring said that 43% of the people were multitasking while they watched TV…2 screen, 3 screen, 4 screen. And you’re seeing Microsoft and everybody else is trying to vie into this era that we’re starting to face, where a lot of content is personalized to the [multitasking] end user.
Now what’s going to happen, and this is looking forward a little bit, I think we’re going to see an evolution in business models. We have more devices, and more stuff coming at us, our behaviors are changing, we’re starting to multitask, but the [old] business models still remain, and are relatively consistent business models, and I think that we’re going to see a whole wave of evolution of business models which might drive even more disruption into the industry.
So then why would Microsoft cut the department, when it seems this might create more avenues to get into homes?
So our research shows that content is [still] a reason why people pick [what they’re consuming]. But once you get [the consumer’s attention], people start thinking about other things, like the quality of their customer experience and how it fits into their lifestyle. I still think content is important, but when you’re trying to lay out the business case and what’s the business model, we’re starting to see the people’s sophistication is changing and that other things are becoming equally important.
I don’t know what exactly was behind Microsoft’s decision but maybe, and I’m just speculating, they decided, “We can still play a major role in the home, even if we’re not directly producing materials.” I don’t think this implies at all that Microsoft is stepping away from being a major player in the consumer market. I just think this perhaps reflects sort of a re-alignment and a reflection that the industry itself has changed. When they started down this path, it was a different world that they were operating in.
How will content providers continue to finding new ways to monetize that content?
So I think we’re going to see a lot more and a lot of different business models begin to emerge. When this all started, we sort of looked at the market in the United States as being a homogeneous market with one or two revenue models. But going forward, I think that we’re going to see segmented revenue models. I think they’re going to see business models that cater to them in their lifestyles and you’ll see different business models catering to families with children, and different ones together for different people. I think that there will be much more choice for people and it’s going to fit people’s lives a lot better.
Children born today grow up in a vastly different world than previous generations with regard to tech. How will their growth, development and expectations change the landscape in the future?
So I think that it’s going to shift things into more of a platform-based environment, where the content delivery mechanisms aren’t so much integrated into the device and the delivery screens, as much as it’s a platform on top of it. There’s a lot of talk about segmentation between millennials, gen x and gen y, but when you go in and talk to the kids in college today, they’ll tell you that the kids in high school use technology totally different than they did, even though there’s only a few years difference between them. And the kids in high school will tell you that the kids even younger than them use it totally differently. So, when you think about a world with this increased level of segmentation, you’re going to have to change these business models. That way you can sort of target multiple demographics with the same network and the same technology. Maybe somebody, if you pick up a laptop or an iPad or your smartphone, you’re going to customize it for the way you want to live your life and consume content, but somebody who’s maybe even 4 or 5 years younger, they might want to pick it up and they’ll have different settings. There might be similar content with similar networks, but [the way] it’ll get delivered will feel like a personal experience designed around the way they want to live their life.
When does technology become too personal?
I think there needs to be a degree of trust. I don’t think privacy is an issue between a consumer and the brands they trust, but when you start talking about between a consumer and a brand they don’t know, that’s where the issue begins to arise. The brand has to prove themselves to a subscriber and win that trust, and then you see that trust becomes something that is to be protected and cherished between the enterprise and the consumer. And perhaps we’ll even see companies taking unprecedented steps to make sure that they maintain that trust level. If you’ve got that trust, then you can do some of those things that allow you ultimately to see monetary gain. There’s a model of trust—the first layer, sort of knowing that the [other] guy is not going to take advantage of you. The second layer is that he’s not incompetent, so he’s not going to let someone else use what he knows for malicious reasons. And there is the third layer, that sort of says that this person is not only going to protect my data, but he’s also going to think like me and look out for my best interest. When you go up that hierarchy of trust, it’s a cherished position and it has real monetizable and measurable value. Most people you ask would rather do business with somebody they trust.
Originally published on July 21, 2014.
Jerry Power is the Executive Director of the Institute for Communication Technology Management (CTM) and Assistant Professor of Clinical Marketing at USC’s Marshall School of Business. Mr. Power works with the Institute to identify emerging trends that will reshape the evolutionary trajectory of the communications sector, and co-authored the book, Transforming Business: Mobility, Big Data and Globalization, which explores how technology is changing business practices among successful companies. Over a 30-year career, Mr. Power has held positions in Marketing, Corporate Strategy, Business Development, Product Management, and Product Development at companies such as Alcatel-Lucent, Siemens, and Motorola. He received MSc in Computer Science from Pennsylvania State University in 1982.