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The economics of spam

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Spammers can make lucrative living even though only 50 in every million people respond to unsolicited commercial email.

While spamming cost are negligible the potential payoffs are "huge and very profitable", according to a paper by Andrew Leung of Canadian telco firm Telus.

Many of the themes of Leung's paper (e.g. the ineffectiveness of legislation against combating spam) are not new but he's assembled the information in a highly readable form that marks a useful contribution to understanding the spam problem. He's particularly strong on the economics of spam.

Leung argues that spam makes economic sense, despite minuscule response rates, because spam can be sent at "virtually no cost to spammers". Spam, unlike conventional junk mail, is growing exponentially because it costs virtually nothing to send and all the costs of dealing with spam are dumped on its recipients.

"Electronic email is not at economic equilibrium, primarily because the cost of sending spam is more or less non-existent in the online world. It costs spammers almost nothing to send their material," Leung writes.

Leung reckons response rates to bulk commercial email is less than 0.005 per cent. That means that a typical email message appeals to 50 people and annoys 999,950. Brightmail chief exec Enrique Salem recently told El Reg that scammers only need one in a million respondents to phishing emails to make the con worthwhile.

Spam economics tilted towards Net parasites

While all these wasted messages have no effect on spammers, for the rest of us they mean lost time, inconvenience and wasted resources (bandwidth, storage etc.)

"The economics are tilted in favour of mass marketers, and stacked against the rest of society," Leung writes.

And the economics of spam are only getting worse for those fighting a tide of rising junk mail that threatens to swamp users' in-boxes.

Aggressive new techniques of harvesting email addresses mean the cost to spammers of hooking new prospects is constantly plummeting. Meanwhile, easy access to slimeware or outsourced spamming services is growing. There's no shortage of anti-spam relays spammers can hijack to send spam, and techniques are evolving so spammers can throttle back the amount of spam they send to avoid detection. And spammers are increasing adept at switching ISPs if their service is terminated.

Leung points out there are no universal anti-spamming policy and that enforcement anti-spam laws that do exist are difficult.

"Spam is a legal grey area: and spammers know that enforcement is difficult, resources are constrained and penalties are minor when caught. Other than a few high profile cases, spammers know that they operate with virtual impunity," he writes.

Leung saves his most savage prose for the spammers' oft-heard contention that they're practicing their rights to free speech.

"All the highbrow defences to spam start to look overblown when you consider the sordid reality of the stuff itself - unwanted pyramid schemes, anti-aging gimmicks and live shower-cam promos. The cacophony drowns out any valuable messages, in any event."

"It might seem that the miniscule response rates would doom the spammer to failure. Quite the contrary, email is so cheap that they can make money even with almost no click-through." ®

External Links

Spam: The Current State, by Andrew Leung of Telus
Latest spam stats from Brightmail
Show 419 spammers what you think of them with our exclusive T-shirts, from Cash 'n Carrion

Spam: full coverage

Microsoft declares war on spam
US anti-spam laws 'will legalise spam'
UK Govt fouls up anti-spam plans, say experts
Spammers break law with covert tracking
Europe bans spam
Gone Phishin'
Climbing Spam Mountain
Where the heck is all this spam coming from?
MP unleashes brilliant anti-spam plan
We hate Spam (email your friends)
The conspiracy against our in-boxes

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