The rise of social networking services like Facebook has created
significant digital privacy concerns. And new geolocation-based
services like Foursquare are creating a whole host of new concerns.

But privacy doesn’t necessarily have to be a touchy subject for today’s
most prominent social networks. Prominent venture capitalist Fred
Wilson, whose firm has invested in Twitter and Foursquare, thinks that there may actually be an opportunity for companies
to charge their users for additional privacy safeguards.

At the Geoloco conference in San Francisco this week, Wilson was quoted as stating: 

When you reveal your specific location, it’s very important that you have control over that… There are business opportunities in privacy-related services. The challenge is to get someone [whether business or consumer] to pay $2-$10 dollars per month to ensure that sort of premium privacy.

Obviously, users should be aware of the privacy policies of the sites they join, and the risks of sharing too much information. When they don’t, they can only blame themselves when their privacy is ‘violated’. That said, some of the sites that have come under fire over privacy concerns, namely Facebook, have changed their privacy policies dramatically over time in an opt-out, not opt-in fashion.

Wilson is certainly correct when he notes that “The challenge for large social networks is to undo permissions that they’ve already given. Meanwhile, a startup is at an advantage as they can build something from scratch that allows the user to predefine the data terms for sharing.” But the only way for large social networks to undo the permissions they’ve already given is to ask the users they’ve made promises to if they can change the terms of their relationship. Anything less than that is ‘bait and switch‘.

From this perspective, I’m not so sure that there’s a legitimate proposition for ‘premium privacy‘ offerings. Companies should think carefully about how the information their users provide is going to be shared, and they should be committed to adhering to the spirit of the privacy policies they initially create — whatever those policies are. Period.

This is not only the right thing to do ethically; long-term it’s the smart thing to do from a business standpoint. That’s because the information users provide is often a company’s most valuable asset. Changing how it’s used without explicit permission is a violation of trust that is likely to damage a company’s reputation over the long haul. Telling users they can pay you to not use the information they share under terms different from the ones you set when they provided it is, in my opinion, more likely to be perceived as extortion than it is to be perceived as a legitimate business model.

At the end of the day, the mainstreaming of online social networking has created significant new business opportunities and made it possible for businesses to know their users in ways rarely possible before. The thorny privacy issues that have arisen because of this are issues that most businesses didn’t have to grapple with before. But social networking hasn’t changed the concept of trust.

Trust is established when actions and words are consistent with each other; when promises are kept. If I tell you that your secrets are safe with me, the trust in our relationship depends on me keeping your secrets. In the world of social networking, any business that believes that users should pay you to act in a trustworthy manner probably won’t be in business five or ten years from now. Put simply, in business as in life, you shouldn’t make promises you’re not prepared to keep. There’s not a (paid) app for that.

Photo credit: rpongsaj via Flickr.