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"It is a sea change in the way the industry works," says Omar Tawakol, CEO of BlueKai. "Advertisers want to buy access to people, not Web pages."

The Journal found that Microsoft Corp.'s popular Web portal, MSN.com, planted a tracking file packed with data: It had a prediction of a surfer's age, ZIP Code and gender, plus a code containing estimates of income, marital status, presence of children and home ownership, according to the tracking company that created the file, Targus Information Corp.

Tracking is done by tiny files and programs known as "cookies," "Flash cookies" and "beacons." They are placed on a computer when a user visits a website. U.S. courts have ruled that it is legal to deploy the simplest type, cookies, just as someone using a telephone might allow a friend to listen in on a conversation. Courts haven't ruled on the more complex trackers.

tracking companies sometimes hide their files within free software offered to websites, or hide them within other tracking files or ads. When this happens, websites aren't always aware that they're installing the files on visitors' computers.

Often staffed by "quants," or math gurus with expertise in quantitative analysis, some tracking companies use probability algorithms to try to pair what they know about a person's online behavior with data from offline sources about household income, geography and education, among other things. The goal is to make sophisticated assumptions in real time—plans for a summer vacation, the likelihood of repaying a loan—and sell those conclusions.

Consumer tracking is the foundation of an online advertising economy that racked up $23 billion in ad spending last year. Tracking activity is exploding. Researchers at AT&T Labs and Worcester Polytechnic Institute last fall found tracking technology on 80% of 1,000 popular sites, up from 40% of those sites in 2005.

The Journal found tracking files that collect sensitive health and financial data. On Encyclopaedia Britannica Inc.'s dictionary website Merriam-Webster.com, one tracking file from Healthline Networks Inc., an ad network, scans the page a user is viewing and targets ads related to what it sees there.

Beacons, also known as "Web bugs" and "pixels," are small pieces of software that run on a Web page. They can track what a user is doing on the page, including what is being typed or where the mouse is moving.

The majority of sites examined by the Journal placed at least seven beacons from outside companies. Dictionary.com had the most, 41, including several from companies that track health conditions and one that says it can target consumers by dozens of factors, including zip code and race.

After the Journal contacted the company, it cut the number of networks it uses and beefed up its privacy policy to more fully disclose its practices.

Flash cookies can also be used by data collectors to re-install regular cookies that a user has deleted. This can circumvent a user's attempt to avoid being tracked online. Adobe condemns the practice.

Most sites examined by the Journal installed no Flash cookies. Comcast.net installed 55.

Wittingly or not, people pay a price in reduced privacy for the information and services they receive online. Dictionary.com, the site with the most tracking files, is a case study.

Think about how these technologies and the associated analytics can be used in other industries and social settings (e.g. education) for real beneficial impacts. This is nothing new for the web, the now that it has matured, it can be a positive game-changer.

Media6Degrees Inc., whose technology was found on three sites by the Journal, is pitching banks to use its data to size up consumers based on their social connections. The idea is that the creditworthy tend to hang out with the creditworthy, and deadbeats with deadbeats.

"There are applications of this technology that can be very powerful," says Tom Phillips, CEO of Media6Degrees. "Who knows how far we'd take it?"

Hidden inside Ashley Hayes-Beaty's computer, a tiny file helps gather personal details about her, all to be put up for sale for a tenth of a penny.

"We can segment it all the way down to one person," says Eric Porres, Lotame's chief marketing officer.

One of the fastest-growing businesses on the Internet, a Wall Street Journal investigation has found, is the business of spying on Internet users.

Yahoo Inc.'s ad network,

"Every time I go on the Internet," she says, she sees weight-loss ads. "I'm self-conscious about my weight," says Ms. Reid, whose father asked that her hometown not be given. "I try not to think about it…. Then [the ads] make me start thinking about it."

Information about people's moment-to-moment thoughts and actions, as revealed by their online activity, can change hands quickly. Within seconds of visiting eBay.com or Expedia.com, information detailing a Web surfer's activity there is likely to be auctioned on the data exchange run by BlueKai, the Seattle startup.