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February 05, 2006

Incentives for large email senders: Yahoo and AOL start charging

We've been expecting this for years. Looks like a serious large-scale experiment in email charging is beginning. But first some background...

Spam email has apparently been with us since 1978, but many of us didn't start to worry about it until the famous Canter and Siegel "green card" email in April 1994. This was the first truly large-scale unsolicited commercial email.

The ICD problem: Email recipients don't want many of the emails that reach their inboxes: at a minimum it takes time to read enough to know that they should be deleted (and of course, some contain viruses, etc.). However, senders may find it worthwhile to send (many) emails that recipients don't want: there is little or no cost to the sender of having an already-sent mail deleted, and some small fraction of recipients may purchase an advertised product or take other action desired by the sender. Because the cost of sending is low, we get a lot of undesired, unsolicited mail in our boxes.

There are various strategies for reducing undesired, unsolicited email. Many of them are technical in nature: e.g., filters. Others create incentives for senders to reduce production. Legal rules are one example: the Can-SPAM Act imposes penalties on senders of unsolicited email that violates certain conditions.

Economic incentives have been an obvious idea. For one thing, we're all familiar with tradition "snail" mail systems that charge postage to senders: the added cost of sending reduces the amount of unsolicited mail (though it does not eliminate it!).

Two UM grad students and a former School of Information (UM) faculty member have published a paper describing an economic incentive system (forthcoming in Berkeley Electronic Press's scholarly journal, Advances in Economic Analysis and Policy). Their system would, among other things, require senders to post a financial bond that could be claimed by recipients if recipients are unhappy about receiving mail from that sender. Roughly speaking, this is a form of probabilistic stamp: sometimes the sender pays, sometimes not.

Which brings us back to the announcement by AOL and Yahoo! that they are going to start using Goodmail's system. Senders can pay Goodmail on the order of a quarter cent, and their mail will be marked as "Certified". AOL and Yahoo! say they will give preferred treatment to mail that is certified. AOL is most explicit at this point: it will not put such mail through its spam filters, and will not strip off attachments and images, or de-activate embedded links. Thus, mail without a Goodmail stamp may be filtered off to a "spam" folder, or may be degraded.

I found amusing a complaint by the CEO of a competing service (Bonded Sender): "A lot of e-mailers won't be able to afford it." Does a claim that companies sending mass mailings can't afford a quarter of a cent per message tell us something about the value they think their mail has? Put another way, the whole point is that many e-mailers won't find it worthwhile to send low value unsolicited mail.

Posted by jmm at February 5, 2006 12:02 AM

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