I’ve written in the past about the increasingly contested and complex issue of online privacy and behavioral targeting. Last week I was featured in an NPR piece discussing this issue within the context of a recent Charter Communications announcement that they would soon begin monitoring their users online activity and behaviors for the publicly stated purpose of improving their targeted advertising platform.

When you examine the topic of online privacy and behavioral targeting, it’s quickly apparent just how complex and multi layered this issue has become. In light of the recent NPR piece, I thought I add some additional context and perhaps fodder for debate – and in an effort to make this more readable, I have broken this post into two parts. I’ll post the second half tomorrow.

One of the fundamental aspects that privacy advocates are missing when they lobby for potential legislation and regulation of online monitoring is the very nature of the Internet Economy – an economy that is predicated, and has been since its inception, on the basic notion of trade. Digital brands (Facebook, MySpace, YouTube, The New York Times, Gmail and countless others) are providing a valuable – and clearly very popular – set of ‘free’ services that are advertising supported and funded by brands in the very same way that television has been broadcasting ‘free’ programming for 75 years. In the case of the social networking sites, consumers are being provided with large amounts of virtual storage space and sophisticated platforms that allow these consumers to connect with their social circle in a single place, communicate via free email services or bypass the $1.50 each day it costs to buy a physical version of the NYT. The key point to understand is that these brands are providing tangible, valuable services that are essentially free to consumers, and the implicit – and explicit – agreement that exists is the trade of information for the use of the services.

While it’s clear that consumers have essentially embraced and accepted the current economic terms of the Internet – services in exchange for personal information – they’re clearly not thrilled with the idea of monitoring their browsing behavior for the purposes of developing more effective marketing. I suspect that consumers understand the 1:1 relationship they have with an a single online brand, but are fearful of the potential repercussions of being monitored on a ‘network level.’ The requirement to monetize these traditionally ‘free services’ via smart, relevant and effective advertising platforms will continue to challenge marketers and publishers to balance the privacy concerns of consumers against the need to generate profitable revenue for providing these services.

I will explore some of the other aspects that are contributing to this complicated and ever-changing issue in subsequent posts, including the second half of this story tomorrow. As always, comments, opinions and questions are welcome.