Re: [projectvrm] 3rd party vs. 4th party

[Doc Searls < >]

On Apr 14, 2011, at 7:53 AM, Katherine Warman Kern wrote:

> Credit cards are paid a fee by individuals. And the credit card companies 
> profit by selling their data.

They also get a piece of the sale. That's a cut out of the seller's side in 
most cases. A seller makes less on a credit card sale than on a cash sale. 
One could say for that reason that credit card companies are fourth parties, 
in the sense that they help the buyer. I have been told this by people in the 
business, by the way.

They also protect both the buyer and seller from fraud, and offer other 
benefits (e.g. insurance) to both sides. 

I don't know enough about card companies selling data. Fill us in on the 
particulars here. 

> They rationalize this conflict of interest by saying they can keep consumer 
> fees down by selling personal data.

Evidence? Not saying there isn't any. I'd just like some. I'm writing a book 
right now, and this kind of information would be very helpful.

>  And they spend a lot of money on lobbyists to tell government regulators 
> this.

Sure.

> A fourth party doesn't improve this. 

How not? If a credit card company doesn't sell data (or, only sells data with 
the customer's permission), and otherwise distinguishes itself by working for 
customers in particular, rather than for other parties, why not distinguish 
their position with a label? That's all the fourth party label does.

> I want a better third party that serves one master and has no conflict  of 
> interest, making more regulation less urgent, and shifting corporate 
> dollars from paying lobbyists to serving me better.

I suggest that would be a fourth party. 

> I would pay more for a credit card that pledges to serve one master.  I 
> would pay more again if they made it simple and even kind of fun to make 
> sense of my own data.  I'd pay more again if they used all the consumer 
> research expertise they have to help me connect with peers and empower us 
> to leverage our information as a group in the marketplace.  I would rather 
> have a relationship with my peers and relate with business as part of a 
> group, anonymously.  
> 
> And I would cancel my other credit cards.  
> 
> Net:  I want a better 3rd party    that serves one master, has zero 
> potential for conflict of interest.

Is "better third party" a good-enough label for that different kind of credit 
card company? Maybe it is.

> The marketing campaign would be very simple.  "No Hidden Agendas" and an 
> image of a one sentence  terms of use and privacy policy statement.

Sure. But marketing by companies and categorizing them for the purposes of 
understanding them are different things. My interest here is making VRM 
easier to understand, in part by bringing a customer-based understanding of 
business to the fore. New words and phrases help for that. "Web 2.0." 
"Tipping point." "Open source." "Really Simple Syndication." None of those 
were in common use, or meant much, before 1998. Now they're unavoidable.

The hardest problem we've had to face as a community, so far, is the 
assumption that improving business as usual is the best that can be done, or 
good enough. We've seen that with CRM, and now with Social CRM.

I've attended two conferences recently wher smart and hip gurus and startup 
CEOs sang the praises of Cluetrain, and saluted me personally, then took some 
of what we've been saying in the VRM community about the rise in personal 
empowerment in the marketplace -- and went on to say that "social media" 
alone was behind this power change, and that what's needed next is "better 
personalization" by the vendor side, and by third parties mostly helping the 
vendor side.

So we have work to do here. It's the same work we were left with when 
Cluetrain failed its full mission.

We thought, when we wrote The Cluetrain Manifesto, that "markets are 
conversations" and "we are human beings and our reach exceeds your grasp" 
both made clear that free customers were more valuable -- to themselves and 
to vendors -- than captive ones. Instead understood Cluetrain came to to mean 
three things:

1)  Marketing (and not just sales) now has to talk directly with customers; 
2)  Social media, because it's conversational, will improve the way companies 
deal with customers; and
3)  Social CRM is what CRM needs to make "relationships" with customers real.

In other words, what we got was better business-as-usual. Half a loaf.

Our challenge is to prove that free customers are more valuable than captive 
ones, that freedom is native to individuals and not conferred by the grace of 
companies, and that dependency is fine only when it goes both ways in the 
form of agreements between parties of equal power.

That means we need whatever it takes to become independent on our own, to 
break out of captivity, and to become better customers in the process.

As that happens, and as business changes, we will see new categories emerge, 
along with new code, new means of engagement, new norms, and new names and 
labels for this new stuff. "Fourth party" is an early move in that direction. 
The fact that some companies already want to make that distinction, and 
either look for fourth parties to emerge, or to become a fourth party 
themselves, is meaningful. Could be we won't end up using that term, and a 
better one will come along, or -- as you suggest -- we won't need it. But as 
long as "fourth party" is current in conversations today, it helps to get the 
best possible understanding of it.

Doc

> Katherine Warman Kern
> 203.918.2617