RealNetworks Launches Privacy Initiative After Breach Fiasco

Only days after becoming the most recent and volatile example of a company abusing consumer information, RealNetworks, Inc. (Nasdaq: RNWK) announced new software and a new privacy initiative designed to rebuild some of the Web community’s eroded trust.

The company’s November 1st revelation that it had been secretly gathering and transmitting personal information about consumer listening habits stirred the already simmering controversy over consumer profiling, which had already prompted the FTC and the Department of Commerce to convene a day-long session consumer privacy conference.

RealNetworks announced Monday that it is installing a new safeguard to allow users of its RealJukebox and other downloadable software programs to give informed consent for the use of their information.

The free version of RealJukebox, which has about 13.5 million registered users, prompts new users for their names and e-mail addresses before they are assigned an identifying number. Although some in the industry speculated that such tracking enabled RealNetworks to identify users who were infringing upon music copyrights, the company said it was only trying to keep an accurate count of the number of people using the software.

Multi-Faceted Tourniquet

RealNetworks updated its Web site privacy statement Monday and added a new consumer software privacy statement to tell users that they can opt out of any information gathering that the company does.

The company also released RealPlayer 7, a new version of its downloadable audio and video player, with the new privacy statements incorporated. The Global Unique Identifiers that the company used to gather information are set to zero by default in the new program, and users have the option of turning them on when they install it.

Links in the online installation guide explain how the GUIDs can be enabled. “Because the RealPlayer 7 does not send a GUID to RealNetworks as part of the electronic registration process, RealNetworks cannot, and will not, associate the RealPlayer GUID with any user’s personal information,” the company said. “Thus, even when GUIDs are enabled by the user, GUIDs will never be stored at RealNetworks with a user’s personal information, and no personal information will either be stored at RealNetworks or transferred to a third party.”

When it discovered the initial problem, the company issued a software update for RealJukebox to prevent personally identifiable information from being transmitted while the player is running.

RealNetworks also formed a privacy advisory board to help advise the company on ongoing privacy issues. Initial members include former FTC Commissioner Christine Varney, and Tara Lemmey, president of the Electronic Frontier Foundation.

In addition, the company joined the Online Privacy Alliance and agreed to undergo a third party privacy audit using one of the independent auditors chosen by TRUSTe, an independent organization that issues seals of approval to online companies that meet certain guidelines to protect consumer trust.

Assuming Leadership

Spinning its announcement to shine the most favorable light on an ugly situation, RealNetworks is now portraying itself as a leader in consumer privacy issues. “This new initiative represents the first step in the implementation of a new program, and sets a standard for the rest of the software industry to follow in informing users of software behavior and the ways in which their privacy is protected,” the company said.

TRUSTe, which also took a public relations hit for not having safeguards in place to prevent such software breaches of consumer trust, also applauded RealNetworks for showing leadership. “RealNetworks is providing real leadership with their software privacy statement,” TRUSTe Executive Director Bob Lewin said.

As a result of the RealNetworks situation, TRUSTe plans to broaden its efforts to cover software products as well as Web sites, Lewin said, using RealNetworks as a test case.