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May/June 1999
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Why Spam is a Problem
By Ray Everett-Church

"Spamming is the scourge of electronic mail and newsgroups on the Internet. It can seriously interfere with the operation of public services, to say nothing of the effect it may have on any individual's e-mail mail system. Spammers are, in effect, taking resources away from users and service suppliers without compensation and without authorization."
--Vint Cerf, ISOC Chairman

We all get junk mail at home and at the office. It is an accepted fact of life--at least in the United States. So why is unsolicited commercial e-mail--also known as spam or junk e-mail--a problem?

To understand the problem of spam, it helps to know what much of today's spam advertises. There are many places on the Internet where copies of spam are reposted by both recipients and system administrators in order to help notify the Internet community about the latest sources of spam. Surveying Usenet newsgroups in the news.admin.net-abuse.* hierarchy, you can quickly see that there are very few reputable marketers using spam to advertise goods and services. To the contrary, the most commonly seen spams advertise pyramid schemes, get-rich-quick and make-money-fast scams, phone-sex lines, and pornographic Web sites. Yet most surprisingly, vast quantities of spam advertise services or software kits so you can become a spammer yourself.

There are six reasons unsolicited commercial e-mail is such a problem:

Cost shifting. Sending bulk e-mail is amazingly cheap. With just a modem and a computer, spammers can send hundreds or thousands of messages per hour, and though that relatively minuscule cost of entry into the market is a potential advertiser's dream, it quickly becomes a nightmare for those who pay the costs of receiving it. The costs can range from the long-distance charges or per-minute access charges for dialing into an Internet service provider (ISP) to the cost of connectivity and disk storage space at the ISP and the inevitable administrative costs when the incoming flood outstrips capacity, resulting in system outages. These costs can be quite substantial: one major U.S.-based ISP estimates that spam costs it more than $1 million per month, accounting for nearly $3 per user per month. It is much harder, however, to calculate the cost of opportunities lost because of system outages, delayed services, and overflowing mailboxes.

The cost implications from spam are compounded by the fact that ISPs purchase bandwidth--their connection to the rest of the Internet--based on projected usage by their prospective user base. For most small to midsize ISPs, bandwidth costs are among one of the greatest portions of their budget and contribute to the reason many ISPs operate on very slim margins. Without junk e-mail, increased consumption of bandwidth would normally track with increased numbers of customers. However, when an outside entity like a spammer consumes that bandwidth, the ISP has few choices: let paying customers cope with slower Internet access, absorb the costs of increasing capacity, or raise rates. Whatever the choice, we all wind up bearing costs that the advertiser has avoided.

The online world is no different from the offline world in the many ways that time equals money. For service providers, time constitutes many different things besides the hourly rate that many people still are charged. An ISP's time also means the speed at which its systems can process the load placed on its servers. CPU time is a precious commodity, and processor performance is a critical issue for ISPs. When the central processing units of a mail server are tied up processing spam, it creates a drag on all of the mail in that queue--wanted and unwanted alike.

These costs are why the junk e-mailer's cry of, Just hit the delete key! falls on unsympathetic ears. If the costs were as minimal as the energy expended in pressing one button, spam would not be a concern. However, when one push of a button can unleash a million e-mails, the costs multiply rapidly and are felt at the many different places where costs are incurred throughout the process of transmitting and delivering e-mail.

Fraud. In survey after survey, the overwhelming majority of Internet users dislike receiving spam. In response to such strong consumer opinion, many ISPs have taken a variety of costly steps to reduce the volume of spam transmitted through their systems, including the buildup of extra capacity to accommodate the demands of filtering and storing what represents, according to America Online, nearly 30 percent of its daily mail traffic. Knowing that ISPs have taken those measures, senders of junk e-mail use tricks to disguise the origin of their messages. One of the most common is to relay their messages off the mail server of a third party. This tactic doubles the damages, because now both the receiving system and the innocent relay system are flooded with junk e-mail. For mail that gets through, many times the flood of complaints goes back to the innocent site because that site was made to look like the origin of the spam. Another common trick is to forge the headers of messages, making it appear as though the message originated elsewhere and again providing a convenient target upon which the anger of recipients and the flood of complaints will land.

Theft. The sending of spam results in one party's imposing costs on another, against the party's will and without permission. Some have called unsolicited e-mail a form of postage-due marketing. Others, quite correctly, call it a form of theft. Although some defend unsolicited commercial e-mail as just another form of free speech, those who bear the costs of someone else's speech are left to ask what part is "free."

Harm to the marketplace. When a spammer sends an e-mail message to a million people, it is carried by numerous other systems en route to its destinations, once again shifting cost away from the originator. The carriers in between suddenly are bearing the burden of carrying advertisements for the spammer. The number of unsolicited messages sent out each day is truly remarkable. Spam-filtering company Bright Light Technologies claims its research shows more than 25 million unsolicited messages are sent every day. Numerous court cases are under way between spammers and the innocent victims who have been subjected to such floods. Unfortunately, whereas major corporations can afford to fight these cutting-edge cyberlaw battles, small mom-and-pop ISPs and their customers are left to suffer the floods.

The harm inflicted is in many respects analogous to the effects on society from something like pollution. For example, it would be far cheaper for chemical manufacturers to dump their waste into rivers and lakes. However, those externalities--as economists call them--allow one party to profit at another's--or everyone's--expense.

Nobel laureate Ronald Coase hypothesized that it is especially dangerous for the free market when an inefficient business--one that cannot bear the costs of its own activities--distributes those costs to the population at large. What makes such a situation so dangerous is that when millions of people each suffer only a small amount of damage, it often is more costly for each individual victim to recover the small portion of the harm allocable to them. Thus, the larger population will continue to bear those unnecessary and detrimental costs until their individual damage becomes so great that those costs outweigh the transaction costs of uniting and fighting back. And the spammers are counting on that: they hope that if they steal only a tiny bit from each of millions of people, very few people will bother to fight back.

Consumer perception. E-mail is increasingly becoming a critical business tool. Yet despite the best efforts of service providers, for many people the accessing of e-mail still represents a bit of a struggle. Many of the major online services remain difficult to access at peak traffic times, and network congestion can make it an arduous task to simply download your e-mail. Once you've fought your way online and waited many minutes to retrieve your mail, what do you see? An array of pornographic Web site ads, a few chain letters, and a hot stock tip from a self-styled securities analyst who can't spell.

The annoyance and frustration caused by such situations cannot be underestimated. Internet users have deserted many public discussion forums for fear that their e-mail addresses will be harvested and added to junk mail lists. Customers are afraid to give their addresses out in even legitimate commerce for fear of being added to and traded among thousands of mailing lists. Legitimate businesses are afraid to use e-mail to communicate with their existing customers for fear of being branded Net abusers. Such distrust threatens to undermine the acceptance and growth of electronic commerce among the legions of new Internet users taking their first steps online.

Electronic mail is a marvel of accessibility and ease of use for tens of millions of Americans and is a critical growth component of the world's young Internet economies. Yet in just a few short years, unsolicited advertisements sent by e-mail have already begun to strangle Internet commerce in its crib. Unless real solutions are found to protect and preserve the viability of the medium, today's crop of scammers and thieves soon will give way to more legitimate marketers who will replace the flood of offensive and fraudulent messages with even greater quantities of ads for snack chips and laundry powder. When that terrible day comes, our electronic mailboxes will cease to be a useful tool for business and personal communications and we will have squandered one of the most powerful tools of communication this planet has ever known.

Global implications. Like the fax machine before it, electronic mail is a marvelous tool of business and personal communication. It's simple, it's accessible, and it's becoming more and more an indispensable part of our professional lives. But there are even more far-reaching potentials of e-mail that may be lost if the medium's functionality and utility get destroyed by the proliferation of junk e-mail. The Internet is an incredible tool for spreading information critical to the development of freedom and democracy around the world. For instance, e-mail is often cited as a vital tool for communicating with and between Chinese democracy activists, and media stories have even credited e-mail as a critical tool in the overthrow of the Suharto regime in Indonesia. Unless a way is found to protect e-mail from the excesses of unscrupulous marketers, the damage they wreak has profound implications for the growth of free speech and democracy around the world.

Ultimately, the problems caused by spam on the Internet--and the solutions applied--will fundamentally shape the ways individuals and businesses use the medium. A myriad of technological, legislative, regulatory, and societal measures have been suggested for curbing the damage caused. However, no matter what solution or combination of solutions is proved to be most effective, a solution must be found because no less than the future of the Internet may be at stake.

Ray Everett-Church is an attorney with the Arlington, Virginia, law firm of Haley Bader & Potts (www.haleybp.com) and is counsel to the Coalition against Unsolicited Commercial E-Mail (www.cauce.org).

Spam Law Update

Ask nearly any Internet service provider (ISP) and they'll tell you their customers' single greatest complaint is spam. To fight the flood, many service providers have tried a variety of technological blocks and filters--with varying degrees of success--but for many, technology alone has not been enough and so they have turned to the law.

Numerous service providers in the United States have successfully sued spammers, arguing that unsolicited e-mail is a form of trespass to the private property of the company. For most ISPs, however, the cost of litigating such a suit is prohibitive. As a result, many longtime Internet users--a group traditionally wary of government intrusion into technology issues--have found themselves in the unfamiliar position of turning to legal rather than technical solutions. Setting aside their distaste for government intervention, coalitions of Internet businesses, consumers, and service providers have begun lobbying their legislators for relief from the rising costs of e-mail spam.

Both pro- and anti-spam bills were considered in 1998 by the U.S. Congress, but intensive lobbying efforts by marketers, consumers, and Internet service providers resulted in a stalemate. Although spam remains on Congress's plate, three state legislatures--California, Virginia, and Washington--each have passed measures to curb the practice within their limited jurisdictions, and a dozen more states have bills under consideration. Legislation to address the problem of cost-shifted advertising is not new to the United States: the rise of junk fax advertisements in the late 1980s generated state and federal legislation that banned the practice.

As the United States grapples with spam legislation, grassroots lobbying efforts in other countries are under way. European and Australian affiliates of the U.S.-based Coalition against Unsolicited Commercial E-Mail have been unveiled and are at work persuading legislators to outlaw junk e-mail in those jurisdictions. In addition, several European Web sites are allowing voters to sign online petitions and to e-mail European Union (EU) decision makers about a new proposal for the EU Liability Directive that would make it easier for Internet users to defend against spam. Those efforts clearly are having an effect: the British Department of Trade and Industry has added spam to its list of issues to be addressed in its Consultation Paper called Building Confidence in Electronic Commerce.

For information on spam proposals around the world, see:


European Union
http://www.euro.cauce.org o http://www.ix.de/ct o http://www.politik-digital.de/spam

United Kingdom

United States
http://www.cauce.org o http://www.jmls.edu/cyber/statutes/email

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