OT: Privacy - There Is No Such Thing As A Free Lunch

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http://www.nytimes.com/2007/09/24/business/media/24adcol.html?th & emc=th

 

Company Will Monitor Phone Calls to Tailor Ads

 

By LOUISE STORY

Published: September 24, 2007

The New York Times

 

Companies like Google scan their e-mail users' in-boxes to deliver ads

related to those messages. Will people be as willing to let a company listen

in on their phone conversations to do the same?

 

Puddng Media, a start-up based in San Jose, Calif., is introducing an

Internet phone service today that will be supported by advertising related

to what people are talking about in their calls. The Web-based phone service

is similar to Skype's online service — consumers plug a headset and a

microphone into their computers, dial any phone number and chat away. But

unlike Internet phone services that charge by the length of the calls,

Pudding Media offers calling without any toll charges.

 

The trade-off is that Pudding Media is eavesdropping on phone calls in order

to display ads on the screen that are related to the conversation. Voice

recognition software monitors the calls, selects ads based on what it hears

and pushes the ads to the r's computer screen while he or she is

still talking.

 

A conversation about movies, for example, will elicit movie reviews and ads

for new films that the caller will see during the conversation. Pudding

Media is working on a way to e-mail the ads and other content to the person

on the other end of the call, or to show it on that person's cellphone

screen.

 

" We saw that when people are speaking on the phone, typically they were

doing something else, " said Ariel Maislos, chief executive of Pudding Media.

" They had a lot of other action, either doodling or surfing or something

else like that. So we said, 'Let's use that' and actually present them with

things that are relevant to the conversation while it's happening. "

 

The company's model, of course, raises questions about the line between

target advertising and violation of privacy. Consumer-brand companies are

increasingly trying to use data about people to deliver different ads to

them based on their demographics and behavior online.

 

Pudding Media executives said that scanning the words used in phone calls

was not substantially different from what Google does with e-mail.

 

Still, even some advertising executives were wary of the concept.

 

" We can never obtain too much information from the targets, and I would love

to get my hands on that information, " said Jonathan Sackett, chief digital

officer for Arnold Worldwide, a unit of the advertising company Havas.

" Still, it makes me caution myself and caution all of us as marketers. We

really have to look at the situation, because we're getting more intrusive

with each passing technology. "

 

Mr. Maislos said that Pudding Media had considered the privacy question

carefully. The company is not keeping recordings or logs of the content of

any phone calls, he said, so advertisements only relate to current calls,

not past ones, and will only arrive during the call itself.

 

Besides, Mr. Maislos said, he thought that young people, the group his

company is focusing on with the call service, are less concerned with

maintaining privacy than older people are.

 

" The trade-off of getting personalized content versus privacy is a concept

that is accepted in the world, " he said.

 

Mr. Maislos founded Pudding Media with his brother, Ruben. Each had spent

several years doing intelligence work for the Israeli military. Before

Pudding Media, Ariel Maislos ran a broadband company called Passave, which

he sold in May 2006 to PMC-Sierra a maker of computer chips for

telecommunications equipment, for $300 million. Richard Purcell, a former

chief privacy officer at

Microsoft<http://topics.nytimes.com/top/news/business/companies/microsoft_corpor\

ation/index.html?inline=nyt-org>,

is an adviser to Pudding Media, Ariel Maislos said.

 

To give the ads greater accuracy, Pudding Media asks users for their sex,

age range, native language and ZIP code when they sign up. For now, the

company is running ads that are sold by a third-party network, but Pudding

Media plans to also sell its own ads in a few months.

 

 

As the company's software listens in on conversations, it filters out

explicit words in determining which ads to select, so that content and ads

will not be shown with those inappropriate words. Pudding Media would not

elaborate, beyond saying that these were " keywords with profanity and things

you wouldn't want a 13-year-old to hear. "

 

While the calling service only works through computers for now, Mr. Maislos

said he saw the potential to use it with cellphones. The company is offering

the technology to cellphone carriers to allow their customers to enjoy free

calls in exchange for simultaneously watching contextually relevant ads on

their screens. Callers can try Pudding Media at www.thepudding.com, dialing

any number in North America. Because the service has so far been in a quiet

beta test, the company would not say how many people have tried it so far.

 

Pudding Media is also trying to sell the technology to Web publishers and

media companies that would like to offer readers free calls and content

related to those calls. A news site, for example, could show only its own

articles and ads to people as they talked to friends.

 

Mr. Maislos said that during tests he noticed that the content had a

tendency to determine conversations.

 

" The conversation was actually changing based on what was on the screen, " he

said. " Our ability to influence the conversation was remarkable. "

 

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