Spam Economics: Who’s the Real Sucker?

Here’s some news hot off the presses: Spam is becoming a problem. Some industry insiders predict spam could become a significant nuisance. A few insiders even believe spam will have a severe, negative economic impact on the growth of the Internet.

I’ve read so much about spam over the last two years, I’m numb to the topic. It’s reached the point when I see columns or articles or white papers about spam, I glide through the opening paragraph or two, then move on if it’s the usual dribble. I just don’t have the patience to read more stories proclaiming spam continues to grow at exponential rates, ISPs are spending hundreds of thousands of dollars trying to stop spam, and some start-up in Palo Alto, CA, just closed a $15 million investment round to support anti-spam software development.

I’m so burnt out on the topic that when spam comes up during cocktail parties, my usual response is to say something like, “Yes, spam is a horrible thing that reflects poorly on the entire industry,” then head for the hors d’oeuvres to see what delicacies await (considering the cocktail parties to which I’m invited, I’m lucky if I find pigs-in-a-blanket).

Don’t get me wrong. I’m not criticizing people for writing about spam. I myself wrote a column about spam not too long ago. I recognize spam is the scourge of the Internet and pay tribute to those who fight the battle. We in the industry should educate the public about spam, and the press is an excellent vehicle for that goal. I just need a break from the constant barrage of spam stories.

At least, I thought I did until I read an article in McPaper, I mean USA TODAY, earlier this week. It blamed the spam problem on consumers who purchase products from spam emails. The author points out “spammers wouldn’t send out junk email if nobody — absolutely nobody — ever clicked through to buy anything.” He goes on to recommend the following course of action, “People have to be told: Never open spam, and if you do, never respond or click through to the Web site it’s luring you to — and if you go that far, never buy anything.”

Now that’s inspiration for you. Just say no to spam. Tell your friends and family to just say no to spam. It’s that simple. I don’t know why we’ve all been wasting our time building spam-zapping software, drafting spam legislation, and hiring attorneys to track down spammers. All we had to do was let history be our guide. We eradicated the drug problem in the United States with the same tactic, didn’t we?

P.T. Barnum was right: There’s a sucker born every minute. No matter how hard we try, we can’t reach them all with the “Just Say No” message. Even if we could, human beings notoriously ignore advice to their benefit. Go to McDonald’s at lunchtime today, and see how people respond when you tell them fast food causes obesity and heart damage.

Therein lies the problem with USA TODAY’s recommendation. We’ll never be able to convince every person on the planet she should ignore spam. There will always be those who buy products based on ridiculous claims about weight-loss, increased virility, and overnight riches. These are the same people who made the late-night infomercial industry successful. They make up a very small percentage of the overall population, but that percentage is large enough to create an economic incentive for miscreants to earn a significant income sending spam.

A Wall Street Journal article last week described EarthLink’s attempts to stop Howard Carmack, the notorious Buffalo Spammer. It described one job Carmack performed for a herbal-stimulant distributor. He received a $10 bounty for every unit of the herbal stimulant sold through a spam campaign he originated. Carmack sent 10 million emails promoting the herbal stimulant and generated 36 sales. That translates to a less-than-stellar 0.00036 percent conversion rate (or should I say Barnum rate?). Carmack’s gross revenue for the project was a whopping $360 — a profitable day for the Buffalo Spammer. Working by himself, from home, using spam campaign software purchased over the Internet on the cheap, sending via EarthLink accounts he set up with stolen credit cards, Carmack made a nice living.

Assuming he could generate $360 a day, 5 days a week, 50 weeks a year (even spammers deserve two weeks’ vacation), Carmack pulled down a tidy $90,000 annually. That’s much more than this malefactor possibly could have earned holding down a legitimate job. Sure, he doesn’t have health benefits or 401(k), but considering his line of work, I doubt he was first in line at the IRS office to file his 1040. There’s your economic incentive.

Spam is here until someone proves Barnum’s “suckertivity” theory wrong or until the economic incentive to spam is eliminated. Spam is an endless battle waged by techies working behind the scenes. Every time a white hat provides a spam-stopping solution that appears to drive a stake through spam’s heart, some black hat working in a basement develops a workaround that resuscitates the entire industry and allows it to resume its blitzkrieg rate of growth.

I’ve been wrong before, but I don’t see any evidence that supports we’re winning the war on spam. One thing I do know, the “Just Say No” approach is doomed to fail.

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