Should Vendor Profit From Students' Web Data?

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February 08, 2001 (5:10 PM EST)

Should Vendor Profit From Students' Web Data?

By John Rendleman,

Internet filtering software provider N2H2 Inc. has ignited a controversy over how businesses can use Internet usage data. Privacy advocates charge that N2H2 is profiting inappropriately from the sale of data it collects on student surfers.

The outcry about N2H2's sale of the data is part of the ongoing debate on the appropriate use of data by Internet companies and whether they can sell the data they collect to private parties. In N2H2's case, the debate is even more heated, because privacyadvocates object to students being the unwitting source of N2H2's income.

N2H2's sale of the data, which is collected on groups of students and not specific individuals, "is an issue that really needs to be examined more closely," says David Sobel, general counsel for the Electronic Privacy Information Center (Epic), a civil liberties group in Washington, D.C.

That concern will grow as the use of Internet filtering products increases. A federal law, the Children's Internet Protection Act, now requires schools and libraries that receive certain federal funding to use content-filtering software, which prevents students from accessing sites deemed inappropriate for kids.

Since 1999, N2H2 (stock: NTWO) has been collecting data on the Internet usage patterns at the schools that use its "Bess" filtering software. Bess funnels Internet traffic to an N2H2 proxy server, a gateway between the schools and the Internet that lets N2H2 collect data on which websites students visit and the types of information they request. In September, N2H2 and New York marketing firm Roper Starch Worldwide began pitching that data to marketing companies and website operators.

N2H2, through Roper Starch, sells the information on students' Web surfing habits for $10,000 a month. So far, it has only two customers: an educational portal on the Web and the Department of Defense. The sale of the data to the Defense Department is particularly troubling to Epic because the government has more power to misuse the data in intrusive ways, Sobel says. The group has filed a request under the Freedom of Information Act asking the Defense Department to explain how it's using the data. "Most parents would find this surprising," Sobel says.

N2H2 says the data portrays collective profiles of students' Internet usage patterns and doesn't reveal individual users' Internet history. The data is collected from a nationwide panel of school districts that contain about 2 percent of the K-12 students, a sample that includes more than 58,000 teachers and 1 million students.

N2H2 and Roper use the information -- including page views, the number of visits, and the time spent viewing the top 1,000 sites -- to project the Internet habits of the country's 43.6 million students.