They know what we are listening to

If you are one of the 10 million people who have purchased an Apple iPod, you've almost certainly loaded it up with songs from your favorite CDs. And, rest assured, Gracenote Inc. knows about it.

Gracenote Inc. knows almost any time a CD is "ripped" for use in a portable music player. Apple, Creative and Rio use its service, as do hundreds of software products devoted to playing and recording music CDs. Yet, few consumers know much about Gracenote.

The company quietly provides an efficient and important service to digital music users.  There's a common misconception that text-based information like song title, length of play, artist name, and the like, is contained on music CDs.  That's rarely the case. Instead, when a CD is loaded into a computer CD tray, software such as Apple's iTunes automatically calls out across the Internet looking for help identifying the music. The questions are posed to Gracenote's CDDB, or CD database.  By recognizing patterns in the data that is included on the CD -- such as the length of each individual track -- Gracenote figures out what the album is. Then, it transmits data, including music genre, composer name, language, year released, and more, back to the user's computer.

Today Gracenote can recognize about 3.5 million CDs.  And it works so well, most music lovers don't even know it's there. 

'It is very anonymous'
That near-anonymity raises some concern among privacy advocates. With the booming popularity of Apple's iPod, and its imitators, Gracenote is accumulating massive amounts of data about consumer listening habits.  But some are wondering if the company, and the various music player manufacturers and software makers, have done enough to inform consumers that information on their musical tastes heads to the Emeryville, Calif. company so often.

"The user has immediate benefit, but the potential trade-offs are very unclear," said Alessandro Acquisti, an expert on the economics of privacy at Carnegie Mellon University. "This is a problem for us on the Internet. It is difficult to assign a value to our data... and there is a future cost which is uncertain. Under these conditions, we often opt for immediate gratification."

There really is no cost, said Gracenote spokeswoman Kathryn Shantz. Gracenote doesn't store any personally identifiable information, she said -- the data the firm receives and compiles, is never tied to individuals.

"It is a very anonymous," she said.  "We don't keep any IP addresses. ... We don't have a way of aggregating the information on an individual basis."

The company does collect enough data to produce its own "Digital top 10" list, published in Billboard magazine. And it can even produce similar lists based on geographic location, down to the level of a metropolitan area.  The firm reserves the right to sell such aggregate data to marketers, but currently doesn't, Shantz says. 

No attempt is made to record precisely who is ripping what CDs, she said. The firm's privacy policy also spells this out clearly.

"We do not use IP addresses for direct marketing purposes and we have neither the desire nor the technology to use IP addresses to identify an individual user by name, address or exact location," it says.  "Furthermore, we delete the IP address when it is no longer needed for security or approximate geolocation purposes."

She also said the firm has never been approached by the Recording Industry Association of America, which regularly sues individuals involved in alleged illegal music downloading.

"(We are) really not in a position to facilitate what they may be looking for because,  When a user puts in a CD, we have no way of knowing whether that CD is a legitimate legal version, whether or not they have the rights to that music," Shantz said.

The trade off
Without Gracenote, music fans everywhere would be spending endless hours typing in music cataloging entries themselves.  There's no evidence the firm isn't practicing what it preaches. Still, those with an ear towards privacy concerns -- while admitting Gracenote's utility -- wonder if the firm has done enough to make sure consumers know what's happening.

"I think people would feel kinda strange," to learn about Gracenote's data, said Richard Smith, of ComputerBytesMan.com.  "Certainly in the (data) collection process, things are not anonymous.  Being up front about all this stuff is always a good idea."

On the other hand, Smith said, consumers clearly like the features Gracenote provides. "There can be two different reactions: 'How dare they,' and 'Who cares?' "

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