PJ Media

The High Cost of a Bad Online Reputation

Back when it wasn’t politically incorrect to want it, it was every boy’s dream to have a reputation, a virtual surrogate of one’s self. A reputation wasn’t identical to the person himself; sometimes it was greater or less. It was always different from the real thing yet it was its distillation. Its chief advantage was that it went before you. Many of the old cowboy stories traded on the idea that a man was only as safe as his repute, though occasionally it worked to imperil him. Because a “rep” was valuable there were always people looking to take it. A 1950s cowboy show television theme succinctly expressed the value of a reputation for a quick draw in the Old West.

Whistle me up a memory
Whistle me back where I want to be
Whistle a tune that will carry me
To Tombstone Territory

If your past has run afoul the law
It’s a handy place to be
But your future’s just as good as your draw
In Tombstone Territory

The days of Boot Hill and Tombstone Territory may be long gone, but reputation is still as important as ever. Nowhere is the need greater than on the Internet because in that environment almost nobody knows who they are dealing with personally any more.

Any transaction of a significance between strangers on the Internet requires the equivalent of a reputation. Otherwise how would anyone know who to trust? Building trust relationships within small communities was something we all knew how to do, but how could such a thing be built among strangers in a globalized world?

One company which had to solve the problem of creating trust relationships between buyers and sellers was the online auction company eBay, which pioneered one of the best known online reputation systems. Online reputation systems are “feedback- mechanisms [which] aim to mitigate the moral hazard problems associated with … exchange among strangers by providing traders with the type of information available in small groups, where members are frequently involved in one another’s dealings”. In other words online reputation systems are virtual “word of mouth” communities through which parties can share the experience of those who they have dealt with. Richard Zeckhauser, a professor at Harvard’s Kennedy School, described the problem and Ebay’s solution: “in the online world, many of the traditional ways to establish a reputation are impossible. eBay has created a system where traditional word-of-mouth recommendations can be broadcast to thousands of potential buyers.”

These systems collect information on the past behavior of a seller, or for that matter of a buyer, and then make that information available to potential future transaction partners. Because people know that their behavior now will affect their ability to transact in the future, not only with their current partner but with unknown others as well, they are less likely to engage in opportunistic behavior. Moreover, less reliable players will be discouraged from joining the marketplace. The purpose of reputation systems is to inform buyers about whether potential trading partners are trustworthy, and thereby to make chiseling and cheating rare and losing propositions.

eBay provided a way to create a trusted name; and an online reputation, which once acquired became just as valuable a commodity as in the gunslinger days of Tombstone Territory. Using Ebay to test his ideas, Zeckhauser concluded that “buyers are willing to spend 7.6% more for items offered by a seller with a solidly positive eBay reputation, according to the results of a controlled experiment involving sales of vintage post cards.” But it was not just traders on eBay who found it necessary to protect their names. Online pundits had to protect their names too. An established online reputation is a powerful thing; and just how much damage a report from a source with a good online rep could create was illustrated by a recent incident involving Apple and Engadget.

Last May [2007], the popular blog Engadget published a leaked internal email from Apple that claimed the release of the iPhone would be pushed from June to October and the company’s Leopard server project was headed for another delay. The news spread quickly from the blog, triggering a selloff of Apple stock that precipitated a US$4.50-per-share drop and a US$4 billion loss in market capitalisation in just six minutes. The only problem: The email was a fake. Apple responded quickly by requesting a correction from Engadget, which complied immediately. Within 20 minutes Apple’s stock price had rebounded, thanks to the company’s speedy response to an influential blogger. The iPhone came out on time, and the rest is history.

A good online rep wrongly used could cause $4 billion of damage in six minutes. For online pundits as well as Internet merchants, an online reputation may be the single most valuable asset they possess. It’s an asset which they have consciously cultivated and seek to protect. But what’s less well known is that most persons on the Internet eventually acquire an online reputation whether they want it or not. Which means that many people have something to lose, a reputation to protect, whether they know it or not. The MIT Technology Review describes a software tool that helps anyone understand his own online reputation and discover those of others.

Today, a Waltham, MA, startup called TrustPlus is releasing a new product that collects information about online reputations so that people can better manage their own, and investigate others’. A person’s online reputation is often stored in a variety of disconnected websites, such as Amazon Marketplace, eBay, and LinkedIn. … The problem, says TrustPlus CEO Shawn Broderick, is that reputation scores aren’t centrally managed, and often the rankings lack context. TrustPlus plans to make reputation portable by centrally collecting information about a person and displaying that information wherever he or she does business or interacts online.

Today the mere act of joining social networks or trading online automatically creates reputational information. It is information that someone, sooner or later, will collect about you. Whatever your family and friends think of you, a virtual doppelganger of yourself is being constructed simply by being online. And that is what the world sees. Predictably, the online spin doctors are not far behind. A Network World article says there are now services available which offer to sanitize or airbrush your online image. The author, Michael Cooney cites the example of a woman who lost her teaching job because of a bad online rep, with the implied question: can you afford to be like her?

If you don’t like what you find or see about yourself on the Web there’s a growing community of companies that can expunge or at least water down the bad stuff and save your reputation — for a price, of course. The need for such services is exemplified in a recent story about a woman in Pennsylvania who is suing Millersville University, claiming that her teaching career was derailed by college administrators who unfairly disciplined her over a MySpace photo that shows her wearing a pirate hat and drinking from a plastic cup. The photo caption read: Drunken Pirate. … Everyone from prospective employers to your next date are looking you up online, so what can you do? Here’s a list of companies that may be able to help out …

The list of companies which promise to sanitize your online past includes outfits have suggestive names like Reputation Defender. It claims it “can help remove or bury negative or embarrassing Web postings … search out all information about you and/or your child on the Internet and present it to you in a clear report. It will also destroy all inaccurate, inappropriate, hurtful and slanderous information about you and/or your child using our proprietary in-house methodology.” It’s a large claim. But if you feel doubtful those companies can actually expunge embarrassing records from Internet sites over which they have no legal control, then you are free to evaluate the credibility of their claims — by examining their online reputations! But if as claimed, they could really delete derogatory information about their clients, then couldn’t they just as easily remove derogatory information about themselves?

Whistle me up a memory
Whistle me back where I want to be
Whistle a tune that will carry me
To Online Territory

If your past has spots that really are lame
It’s a handy place to be
But your future’s just as good as your name
In Online Territory

Richard Fernandez also writes at the Belmont Club.