The Economics of Spam by Sam Vaknin

The Economics of Spam by Sam Vaknin

Tennessee resident K. C. "Khan" Smith owes the internet service provider EarthLink $24 million. According to the CNN, last August he was slapped with a lawsuit accusing him of violating federal and state Racketeering Influenced and Corrupt Organizations (RICO) statutes, the federal Computer Fraud and Abuse Act of 1984, the federal Electronic Communications Privacy Act of 1986 and numerous other state laws. On July 19 - having failed to appear in court - the judge ruled against him. Mr. Smith is a spammer.

Brightmail, a vendor of e-mail filters and anti-spam applications warned that close to 5 million spam "attacks" or "bursts" occurred last month and that spam has mushroomed 450 percent since June last year. PC World concurs. Between one seventh and one half of all e-mail messages are spam - unsolicited and intrusive commercial ads, mostly concerned with sex, scams, get rich quick schemes, financial services and products, and health articles of dubious provenance. The messages are sent from spoofed or fake e-mail addresses. Some spammers hack into unsecured servers - mainly in China and Korea - to relay their missives anonymously.

Spam is an industry. Mass e-mailers maintain lists of e-mail addresses, often "harvested" by spamware bots - specialized computer applications - from Web sites. These lists are rented out or sold to marketers who use bulk mail services. They come cheap - c. $100 for 10 million addresses. Bulk mailers provide servers and bandwidth, charging c. $300 per million messages sent.

As spam recipients become more inured, ISP's less tolerant, and both more litigious - spammers multiply their efforts in order to maintain the same response rate. Spam works. It is not universally unwanted - which makes it tricky to outlaw. It elicits between 0.1 and 1 percent in positive follow ups, depending on the message. Many messages now include HTML, JavaScript, and ActiveX coding and thus resemble viruses.

Jupiter Media Matrix predicted last year that the number of spam messages annually received by a typical Internet user is bound to double to 1400 and spending on legitimate e-mail marketing will reach $9.4 billion by 2006 - compared to $1 billion in 2001. Forrester Research pegs the number at $4.8 billion next year.

More than 2.3 billion spam messages are sent daily. eMarketer puts the figures a lot lower at 76 billion messages this year. By 2006, daily spam output will soar to c. 15 billion missives, says Radicati Group. Jupiter projects a more modest 268 billion annual messages by 2005. An average communication costs the spammer 0.00032 cents.

PC World quotes the European Union as pegging the bandwidth costs of spam worldwide at $8-10 billion annually. Other damages include server crashes, time spent purging unwanted messages, lower productivity, aggravation, and increased cost of Internet access.

Inevitably, the spam industry gave rise to an anti-spam industry. According to a Radicati Group report titled "Anti-virus, anti-spam, and content filtering market trends 2002-2006", anti-spam revenues are projected to exceed $88 million this year - and more than double by 2006. List blockers, report and complaint generators, advocacy groups, registers of known spammers, and spam filters all proliferate. The Wall Street Journal reported in its June 25 issue about a resurgence of anti-spam startups financed by eager venture capital.

ISP's are bent on preventing abuse - reported by victims - by expunging the accounts of spammers. But the latter simply switch ISP's or sign on with free services like Hotmail and Yahoo! Barriers to entry are getting lower by the day as the costs of hardware, software, and communications plummet.

The use of e-mail and broadband connections by the general population is spreading. Hundreds of thousands of technologically-savvy operators have joined the market in the last two years, as the dotcom bubble burst. Still, Steve Linford of the UK-based Spamhaus.org insists that most spam emanates from c. 80 large operators.

Now, according to Jupiter Media, ISP's and portals are poised to begin to charge advertisers in a tier-based system, replete with premium services. Writing back in 1998, Bill Gates described a solution also espoused by Esther Dyson, chair of the Electronic Frontier Foundation:

"As I first described in my book 'The Road Ahead' in 1995, I expect that eventually you'll be paid to read unsolicited e-mail. You'll tell your e-mail program to discard all unsolicited messages that don't offer an amount of money that you'll choose. If you open a paid message and discover it's from a long-lost friend or somebody else who has a legitimate reason to contact you, you'll be able to cancel the payment. Otherwise, you'll be paid for your time."

Subscribers may not be appreciative of the joint ventures between gatekeepers and inbox clutterers. Moreover, dominant ISP's, such as AT&T and PSINet have recurrently been accused of knowingly collaborating with spammers. ISP's rely on the data traffic that spam generates for their revenues in an ever-harsher business environment.

The Financial Times and others described how WorldCom refuses to ban the sale of spamware over its network, claiming that it does not regulate content. When "pink" (the color of canned spam) contracts came to light, the implicated ISP's blame the whole affair on rogue employees.

PC World begs to differ:

"Ronnie Scelson, a self-described spammer who signed such a contract with PSInet, (says) that backbone providers are more than happy to do business with bulk e-mailers. 'I've signed up with the biggest 50 carriers two or three times', says Scelson ... The Louisiana-based spammer claims to send 84 million commercial e-mail messages a day over his three 45-megabit-per-second DS3 circuits. 'If you were getting $40,000 a month for each circuit', Scelson asks, 'would you want to shut me down?'"

The line between permission-based or "opt-in" e-mail marketing and spam is getting thinner by the day. Some list resellers guarantee the consensual nature of their wares. According to the Direct Marketing Association's guidelines, quoted by PC World, not responding to an unsolicited e-mail amounts to "opting-in" - a marketing strategy known as "opting out". Most experts, though, strongly urge spam victims not to respond to spammers, lest their e-mail address is confirmed.

But spam is crossing technological boundaries. Japan has just legislated against wireless SMS spam targeted at hapless mobile phone users. Four states in the USA as well as the European parliament are following suit. Expensive and slow connections make this kind of spam particularly resented. Still, according to Britain's Mobile Channel, a mobile advertising company quoted by "The Economist", SMS advertising - a novelty - attracts a 10-20 percent response rate - compared to direct mail's 1-3 percent.

Net identification systems - like Microsoft's Passport and the one proposed by Liberty Alliance - will make it even easier for marketers to target prospects.

The reaction to spam can be described only as mass hysteria. Reporting someone as a spammer - even when he is not - has become a favorite pastime of vengeful, self-appointed, vigilante "cyber-cops". Perfectly legitimate, opt-in, email marketing businesses often find themselves in one or more black lists - their reputation and business ruined.

In January, CMGI-owned Yesmail was awarded a temporary restraining order against MAPS - Mail Abuse Prevention System - forbidding it to place the reputable e-mail marketer on its Real-time Blackhole list. The case was settled out of court.

Harris Interactive, a large online opinion polling company, sued not only MAPS, but ISP's who blocked its email messages when it found itself included in MAPS' Blackhole. Their CEO accused one of their competitors for the allegations that led to Harris' inclusion in the list.

Coupled with other pernicious phenomena, such as viruses, the very foundation of the Internet as a fun, relatively safe, mode of communication and data acquisition is at stake.

Spammers, it emerges, have their own organizations. NOIC - the National Organization of Internet Commerce threatened to post to its Web site the e-mail addresses of millions of AOL members. AOL has aggressive anti-spamming policies. "AOL is blocking bulk email because it wants the advertising revenues for itself (by selling pop-up ads)" the president of NOIC, Damien Melle, complained to CNET.

Spam is a classic "free rider" problem. For any given individual, the cost of blocking a spammer far outweighs the benefits. It is cheaper and easier to hit the "delete" key. Individuals, therefore, prefer to let others do the job and enjoy the outcome - the public good of a spam-free Internet. They cannot be left out of the benefits of such an aftermath - public goods are, by definition, "non-excludable". Nor is a public good diminished by a growing number of "non-rival" users.

Such a situation resembles a market failure and requires government intervention through legislation and enforcement. The FTC - the US Federal Trade Commission - has taken legal action against more than 100 spammers for promoting scams and fraudulent goods and services.

"Project Mailbox" is an anti-spam collaboration between American law enforcement agencies and the private sector. Non government organizations have entered the fray, as have lobbying groups, such as CAUCE - the Coalition Against Unsolicited Commercial E-mail.

But Congress is curiously reluctant to enact stringent laws against spam. Reasons cited are free speech, limits on state powers to regulate commerce, avoiding unfair restrictions on trade, and the interests of small business. The courts equivocate as well. In some cases - e.g., Missouri vs. American Blast Fax - US courts found "that the provision prohibiting the sending of unsolicited advertisements is unconstitutional".

According to Spamlaws.com, the 107th Congress discussed these laws but never enacted them:

Unsolicited Commercial Electronic Mail Act of 2001 (H.R. 95), Wireless Telephone Spam Protection Act (H.R. 113), Anti-Spamming Act of 2001 (H.R. 718), Anti-Spamming Act of 2001 (H.R. 1017), Who Is E-Mailing Our Kids Act (H.R. 1846), Protect Children From E-Mail Smut Act of 2001 (H.R. 2472), Netizens Protection Act of 2001 (H.R. 3146), "CAN SPAM" Act of 2001 (S. 630).

Anti-spam laws fared no better in the 106th Congress. Some of the states have picked up the slack. Arkansas, California, Colorado, Connecticut, Delaware, Idaho, Illinois, Iowa, Kansas, Louisiana, Maryland, Minnesota, Missouri, Nevada, North Carolina, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Virginia, Washington, West Virginia, and Wisconsin.

The situation is no better across the pond. The European parliament decided last year to allow each member country to enact its own spam laws, thus avoiding a continent-wide directive and directly confronting the communications ministers of the union. Paradoxically, it also decided, three months ago, to restrict SMS spam. Confusion clearly reigns. Finally, last month, it adopted strong anti-spam provisions as part of a Directive on Data Protection.


About the Author
Sam Vaknin ( http://samvak.tripod.com ) is the author of Malignant Self Love - Narcissism Revisited and After the Rain - How the West Lost the East. He served as a columnist for Central Europe Review, PopMatters, and eBookWeb , and Bellaonline, and as a United Press International (UPI) Senior Business Correspondent. He is the the editor of mental health and Central East Europe categories in The Open Directory and Suite101.

Fighting Fire With Fire Won't Douse The Fire by Stephen Brennan

Fighting Fire With Fire Won't Douse The Fire by Stephen Brennan

In the last few weeks, I have noticed an increase in tools or methods devised exclusively to fight the Spam fight. I applaud the originators ideals and their ingenuity, but I must voice my concern about the way in which such concepts can often backfire, sometimes in the nastiest of ways.

I abhor spam. I hate it with a vengeance and would do ALMOST anything to rid the Internet of it entirely. The worldwide financial consequences alone run into billions of dollars annually.It is comparable to the disruption that the propagation of viruses causes and is responsible for creating a completely independent niche market for the sale of tools and software programs designed simply to combat it. Although, I would imagine that even those engaged in this area of marketing would also welcome it's demise, however unlikely it might seem at the moment.

The latest is a web page that we are all being asked to link to which, as I understand it, will result in the email addresses listed on that page, which are 'known' spam originating addresses, being inundated with so much spam, generated by their own 'spiders' (entities which crawl the Net looking for email addresses) that their data will be effectively useless due to the spider being effectively sent on an endless 'loop'. A simple but brilliant little idea - But is it safe?

What if an innocent email address should find it's way onto that web page? What if one is maliciously placed there? Does that email address get caught up in the vicious circle of unsolicited email? Maybe not, but even if the method precludes this particular 'backfire', more to the point, is it right to spam the 'spammer'? If you rob a thief, doesn't that make YOU a thief too, regardless?

The fact remains also, there hasn't been a means of stopping spammers that has worked yet. Will they be somehow able to turn this idea around and use it against the Internet population?

I can understand the anger, frustration and the sometimes, sheer desperation that some may feel after having been an especially badly 'bashed' spam victim, but doesn't this type of 'payback' solution smack of 'Internet vigilantism' or 'taking the law into one's own hands' (something that is wrong and dangerous, no matter how justified and tempting it may seem to be)?

Apart from the obvious 'dragging down to their level' in which this method results, isn't it illegal? Are the people who have put together this web page and promoted it's use in danger of the authorities deciding that they too, are contributing to the daily plague of spam? I do hope not, as I know their intentions are based in a sense of fighting a huge, common evil.

I heard that the first 'high profile' case against a spammer in the U.S., resulting in a hefty jail term, concluded only last week. I know that the wheels of 'justice' do turn slowly, in almost everything but I believe the reason for that is so that mistakes and more injustices do not result.

That is my concern with Internet citizens deciding to, as I said, take the law into their own hands and perhaps overlooking where their actions may backfire, or worse, give the spammer an even more powerful tool with which to assault their victims. I shudder to think what spammers, especially those who fall victim to this new idea, might do if they find the identity or email addresses of the devisor/s of this idea.

We have relatively new laws to deal with spam and it's perpetrators. As I said, there has been, to my knowledge only one 'notable' and 'highly publicized' instance of the law at work, where the Internet community has been able to feel a sense of 'justice' and, yes......payback, revenge, whatever. Give the Law a chance.

Again, I do understand the need for action and I know exactly how people feel about those who would spoil one of the communication, information and media marvels of this, and the last century. However, I think we need to, at least, give the law a chance to make a difference before we even think about resorting to such means to dissuade spammers from plying their trade. If to no one else, we owe it to ourselves.
About the Author
Stephen Brennan runs the Home Based Business and Affiliate Center- http://www.online-plus.biz and is the author of The Affiliate Guide Book - The definitive guide to becoming a successful Internet Affiliate (at little or no cost) - available at http://www.ebooks.online-plus.biz

Detect, Protect, Dis-infect by Robert Rogers

Detect, Protect, Dis-infect by Robert Rogers

Consumers Online Face Wide Choices in Security Products

With new threats to computer security and data integrity a regular feature of the evening news, a panoply of products that promise to detect, protect, and dis-infect are being marketed to consumers. Intrusion detection systems, firewalls and anti-virus software are critical to online security, but the Federal Trade Commission, the nations consumer protection agency, says computer usersfrom grade school kids to grandparentsneed to know exactly why they need online security products and what theyre buying.

Why the Need
Computers talk to each other over the Internet by sending data through their communications ports. If a port is open, it listens for communications from the Internet. A computer has thousands of ports: which ones are open depends on the software the computer is running. Hackers can eavesdrop or scan the ports to determine which are open and vulnerable to unauthorized access.

Detection
An intrusion detection system (IDS) monitors incoming Internet traffic, much like a security camera watches your front door to see who might be trying to come in. When the IDS detects a suspicious pattern, it sends an alert (and creates a record) that an intruder may be trying to break in to your computer. Some IDS alertsbut not allshow a pop-up message on your screen. An IDS alone cannot prevent an unauthorized entry into your computer; only a firewall can do that.

Protection
Firewalls block hackers access to your computer by creating a barrierlike a wallbetween your ports and the Internet that allows you to control the data that comes and goes through your ports. Your firewall protects your ports even if you dont have an IDS. Sometimes a firewall is bundled with an IDS. If not, and if you want an IDS, be sure its compatible with your firewall.

Dis-infection
Anti-virus software detects and deletes viruses that are in your computer. Viruses often attach themselves to your computer through email attachments and floppy disks. That means a firewall cant catch them. Similarly, an IDS wont alert you when a virus is attacking your computer. Look for anti-virus software that recognizes current viruses, as well as older ones; that can effectively reverse the damage; and that updates automatically.


About the Author
Robert Rogers is a writer in the Washington DC area and specializes in computer security.
For More Information - Visit www.spycollege.com