William H. Magill on 19 Oct 2003 15:55:02 -0400

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Re: [PLUG] OT: Spam

On Sunday, October 19, 2003, at 01:40 PM, Bob Schwier wrote:
I have a stupid question and I would really like to know.
Spammers exist by pissing people off.  Do they really make a
profit from it?
Do the companies that pay them to do their thing really realize a
profit from this operation?
Do they really get that one response for 99 angry deletes that might
make it worth while?

Yes, to all of the above.

The problem with bulk electronic mail is that it is incredibly cheap. So much cheaper than any other form of advertising that there is no comparison.

Direct mail solicitation has always been a 1% operation.... you send out a mailing and if you get a 1% response you hold a big party!

This is why a number of Direct Mail operations (Richard Viguarie being one of the most successful and notorious) who manage to clean and cull their lists to drive the return rates up towards 10% and higher command significant prices for their lists -- several dollars per name in the case of "cause" contribution lists.

I've been out of the Direct Mail business for many years now, but simple reverse phone book lists at one time were running something like $100 per 1000 names. (That was back in the days when the phone books were NOT computerized the way they are now.) But if you had a list of say, club members to "license," you could get two or three times that amount.

Keep in mind also that there are two types of spammers -- those who are selling porn and those who have real products or services to sell. Virtually everyone who complains lumps them together, but they are in fact two different industries who operate by two different sets of rules and economics.

Just as porn determined the death of Beta (Sony would not license the format to them), so to has it driven the expansion of the Internet. The amount of dollars earned by porn websites and the like dwarfs the total from all other forms of electronic commerce. Were it not for the "efforts" of the porn folks, the Internet would still be plugging along at 28.8K. Aside from those of us in Academia, the commercial side of the Internet simply cannot "justify" a T3, let alone an OC6 pipe. Not that everyone doesn't want one, but they can't convince the bean counters that there is any tangible result. The dollars that flow into the company from the website don't begin to cover costs... unless they are selling porn. The costs of websites are hidden under the amorphous headings of "Advertising" and "Customer Service," but not listed as revenue producing.

Porn sites don't care how many people they "bother" -- everybody they get is a new customer. One that makes the cash register ring.

Real commercial sites, say like "FireWire Direct," "Lands End" or even "X10," are also "mass" marketers. They have a marginal interest in "alienating" people. Because the market they serve is small enough that it doesn't matter. All they need is that 1% response rate and they are ahead of the game. Usually, (X10 being the exception) they are not as in-your-face as the porn sites. They tend to try to build "clean" lists -- lists of people who actually want to hear about their products.

We are now watching the dissolution of the AOL Empire because it was nothing but a house of cards. We have seen Worldcom, Global Crossing and others blow up for the same reason. There is still a massive amount of excess capacity in the Net and were it not for SPAM, there would probably be 50% MORE excess capacity than is now claimed to exist.

The growth of the Internet today has far outpaced its commercial usefulness. This is not to say that there are not things which could be done with bandwidth, but rather to say that there are not things which can be done which will make people money and thereby justify the expenditure of money on additional bandwidth.

Personally, I think that Apple has led the way with the iTunes music store concept. We are just now seeing "everybody" else jumping on the bandwagon. I expect that if we can get rid of the RIAA and the rest of the Luddites intent on preserving the "old way of distribution" (IP arguments are simply a smokescreen for their loosing big dollars to the competition) we will see DVDs and the like available in the same way in 12-24 months, and not just via the pay-per-view cable channels.

But as that happens, the Free Internet as we know it today will begin to disappear. Pay for "Service" will become the norm, possibly as early as 2005. Just as Personal Video Recorders are about to render the old "broadcast advertising" mechanism "worthless" you will see more "tiered" services offered --- for free you get lots of spam; pay money and it is eliminated. (What I'll call the Eudora model.) I have no trouble envisioning ISPs charging additional dollars per month to filter your email for you. After all, everybody is demanding it, so why not charge for the service. Offer a two tiered service -- filtered and unfiltered at say a $20 per month difference. As more and more people move to Cable modem connections, you have no alternative choice of ISP. (I know there are a couple of court suits on that one). The same is true of most DSL connectivity. In this area, outside of Comcast, Road Runner and Verizon if you ask 100 people who they can get their Internet connection from, the only alternative they will offer is AOL or Earthlink... via dial-up. The "consuming public" is nowhere near as "net-literate" as the members of this mailing list.

SPAM is a "transforming" technology; it causes change.

There is no question but the Net is a radically different place today than it was when the NSFnet shutdown. The amount of porn on USENET went asymptotic in the three months following that change. The only reason that there is as much of a "demand" for "the way things were" is that there are still a lot of us hanging around who used the ARPAnet and NSFnet where such things were banned by Government fiat. The Net is a wide-open thing today, radically different than either the ARPAnet or NSFnet ever were. SPAM is a direct reaction to that openness. People on the Net are still trying to figure out what SPAM is and how to deal with it. (Ask 10 people and you will get 10 different definitions of SPAM, let alone solutions.)

The technology of the net is evolving, surprisingly slowly, but virtually all of it is still operating at v1.0 levels. The most primitive part of the Net (and computing in general) is still the Authentication and Authorization part, it simply doesn't exist and is staunchly rejected and objected to by many. That attitude is changing, and will change more significantly once IPv6 is widespread. But there is still a long way between now and then.

T.T.F.N. William H. Magill # Beige G3 - Rev A motherboard - 768 Meg # Flat-panel iMac (2.1) 800MHz - Super Drive - 768 Meg # PWS433a [Alpha 21164 Rev 7.2 (EV56)- 64 Meg]- Tru64 5.1a magill@mcgillsociety.org magill@acm.org magill@mac.com

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