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Sunday, November 14, 2004

Why spam will go away.

I was just reading an article outlining "The Webmail Wars" between gmail, hotmail, and yahoo.

I have a few thoughts on this. One is the portability issue, but I'll get to that in a bit. Now the real light bulb that just went off is that Adam Smith is right once again. I think I have the business model of why spam will disappear without government REGULATION.

How does Gmail make money?
Generally speaking, Google places advertisement in your Inbox. If you click though the advertisement, they make money. Google is happy, the advertised website is happy, you are happy.

How do Spammers make money?
Generally speaking, Spammers place advertisements in your Inbox. If you click though or purchase their product, they make money. The Spammer is happy, the advertised website is happy, you are most likely unhappy and that is why you are buying Viagra.

Right now it costs about $20/month to send a spam messages to 5 million individuals. I would honestly guess that for most products, the amount of click through's is in the hundreds at most. My guess is that if that the click though rate was any higher, there would be a higher margin to rent the email list.

Wouldn't it be beneficial for spammers to target their audiences? Of course, but only if the cost wasn't prohibitive. That's where Google's AdWords comes in. Google's AdWords is an open cost model. I would say it works similar to bidding on an auction, ie. "How much are you willing to pay to have somebody click though to your website?"

Cost-per-clicks (CPC) range from $0.05 to $100.00. For a spammer, I would imagine they would be willing to spend $0.05 per click. At $20/month, that yields 400 visitors to their site. I am sure that number is very similar to their current marketing efforts (if not better.) With increased competition between email services, as the above Webmail War article mentioned, the cost will only be driven down lower, maybe even reach a point of only incurring a cost if an item is actually purchased. Other metrics for deciding a cost may be based off if a consumer asks an inquiry, or a consumer spends more then 1 minute on the website, etc. We have only seen the tip of the iceberg when it comes to non-intrusive responsible advertising on the internet. I live in nyc, I am bombarded with advertisements on every street corner, every taxi and bus. We even have bike messengers in this two horse town with advertisements on their bikes.

Now the only problem would be the solicitation of illegal or inappropriate materials, (child porn, porn to youngsters, american eagle ads to hipsters, ...) most likely Google will not allow that, but there appears to be a large market for it. Maybe one solution could be hashcash. The idea has been around for a long time, but if the email market adopted a system like this, I think it could have a substantial impact. Especially when computers become so powerful enough, that it takes minutes to bruteforce an email message to every hotmail account 15 characters in length or shorter. Hashcash could account for this by relying on strong, more complex hashing algorithms.

Also, we will have to watch out for the next wave of attacks, SPIM. However, I envision one day we will all use Gim, Google's answer to Instant Messaging. I would envision AdWords being built directly into our instant messaging conversations. Ohh, you're heading to a party at Brad's house, and Brad lives 12 blocks away in downtown Philly? Well here is a link to 5 liquor stores between your apartment and Brad's house. Click though now and place your order online so it can be ready to be picked up on your walk over.

...

Back to the email portability factor, you know, like the cell phone number issues. A few years back, I had purchased my own domain name to host my email so I could have reliable service and keep an email address I would be happy with. But when I found out that Google was offering an email service with revolutionary searching capabilities, I was all over it and left my old account in the dust. I sent out the necessary boiler plate of "I have moved email accounts, ...." and that was the last time I looked back.

I still check my old email account and reply with updates or change my profile on websites as needed and this has ended up working very well for me. What I haven't done which could be beneficial to a lot of people is to just set up a default email fowarder to my new gmail account. For all intensive purposes, this would keep an existing email address "portable" for those people to scared to loose their precious address.

1 Comments:

Blogger Vincent said...

My buddy Josh made this point:
"You talk about prices coming down on adwords-style system, but why wouldn't prices also come down on spam prices as well?

The way I see it, once you have the list, it's essentially free to spam away as much as you want. Until you make that cost more (with technical or legal solutions), I can't think of why spamming won't disappear."

So two points:
1. Price differences:I think they will both drop to the same pricing scheme. For instance, maybe AdWords will always be a little more expensive because they offer targeting. Maybe google could offer a no-targeting service that is the same price as spam rentals. I don't see any advantage for spammers to stay around. I think a system like AdWords could always match their price and offer more value.

Compare it to cell phones and land lines. Currently both exist, in the past cell phones were very expensive, now they are approaching the costs of a land line, in the future they may be cheaper then a landline and offer more services. Maybe cell reliablity will be 99.999999999% and people would feel secure to drop their land lines.

2. Once you purchase a list, you have it as much as you want:It is a lot more expensive to actually purchase a list. The prices I quoted above refer to "renting" a list to which I assume you may not even see.

2:38 PM

 

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