Every now and again I’m asked to comment on the issue of personalised pricing. I say the issue: there’s very little proof that it online pricing personalisation happens, though I know many who would swear they have experienced it.
If you’re not familiar with the concept, it goes a little something like this. Even if you have never visited a website before, the minute you click ‘go’ on its URL, that website learns a lot about you. Not all of this information will be available every time, or 100% accurate, but for example, they can find out where you are and what machine you’re using.
If you’re using the latest iPhone in leafy Surrey, you might be offered a different price to say, someone using a three year old Android phone in north Manchester. That’s to make no comment on either place: the rough geographic data that is available to the website would simply tell it that people in one place are wealthier than the other.
If you have visited the website before, then the likelihood is that it knows a whole load more about you and can make much more sophisticated decisions. One of the accusations is that travel companies display higher prices to people who have already checked out a flight, gone away and come back. But if you’ve ever shopped with them, before you have even logged in they will likely also know your name, age, email address, Facebook profile and a lot more on which to base their pricing, or any other decision.
The other possible decisions are important because this data in itself isn’t necessarily a bad thing, even if it can spook people. If it was all bad, it’s unlikely I would have founded CANDDi, a software company that makes possible the gathering of this data, six years ago. We envisaged companies using this data to create an experience that was more like your local shop.
Here we’ve had personalisation (and personalised pricing) for centuries. In a rose-tinted vision of past village life, the butcher, baker and landlord all knew just enough about you to have a friendly conversation as you walked through the door, and to trust you enough to let you off now and again when you were a shilling short.
In reality, the data that CANDDi collects is used for all sorts, but nothing nefarious that I have seen. It’s mostly companies trying to operate a 21st century version of the village store on a much larger scale — both in terms of numbers and geography.
The original premise of this post was this: is a personalised web inherently unfair? There are certainly issues with personalisation: it narrows our experience of online content, reinforcing our existing choices/prejudices and hiding alternative products and views from us. It’s like only ever reading one newspaper: you will only see the world through its lens.
If pricing is personalised to us, based on our perceived wealth or how much we desire a product, is that unfair? My natural inclination is that it is, and the Office of Fair Trading agrees: in 2012 the organisation looked into personalised pricing and didn’t find any evidence that it was happening. But it warned that if it did, there would be penalties for ‘misleading or unfair practices’. The Competition and Markets Authority is similarly looking at the issue with regards to price comparison sites, according to this recent briefing from Out-Law.com.
I’m off to 5live to discuss this topic this morning, and they may have some new evidence. It’s definitely a topic to watch.