The economics of spam

Junk emails cost $20bn a year. Not just an irritation.

Here's a fascinating new paper (pdf) from the Journal of Economic Perspectives on the economics of spam, by Justin Rao and David Reiley:

The negative externalities imposed by spam include wasted time for consumers: both wading through irrelevant advertisements in one’s inbox and missing an important message that went to the junk mail folder. They also include the costs important message that went to the junk mail folder. They also include the costs of server hardware, which requires more than five times as much capacity as would be required in the absence of spam, as well as the costs of spam prevention services provided by firms to reduce the burden on users. . .

Taken together, the total costs of spam worldwide today appear to be approximately $20 billion, in round numbers.

The authors review literature on the revenue of spammers, and find that it's likely to be around $300m a year. In other words, spam destroys around $19.7bn dollars of value every year. The authors compare this to car theft, which imposes societal costs of around $10bn and brings revenues to the thieves of around $1bn; and to driving a car, which imposes societal costs of around five cents a mile and brings in average revenue of around 60 cents a mile.

Clearly all these numbers are extremely rough estimates, but if they are even in the same ballpark as the truth then it is clear that spam ought to be a public policy priority to a far greater extent than it actually is. Imagine if the number of car thefts doubled overnight; would people really question whether that calls for governmental involvement?

The problem the authors identify is one of negative externalities, similar to the issues raised by carbon emissions. So one would expect the solution to be analogous to the solution economists often call for to deal with externalities, which is a Pigovian tax - charging someone who harms society an amount equivalent to the damage they do. Unfortunately, as the authors show, such a measure is pretty much impossible when it comes to email spam. The spammers would obviously not co-operate, and every alternative involves trying to graft on some form of payment mechanism to email, which is a protocol incredibly unsuited technologically to any such addition.

Instead, the best thing to do is probably to hit the spammers where it hurts: their revenues.

One fruitful avenue is to put legal pressure on domestic banks that process payments from foreign banks known to act on behalf of spam merchants. This could put downward pressure on conversion rates and with them, proifts. Another proposal comes from our colleague Randall Lewis, who imagines “spamming the spammers” by identifying spam emails and placing fake orders on spam-advertised stores. This step would increase the merchants’ costs dramatically, as they would find it much more difficult to fullfil orders, and their banks may raise their fees if they submit many invalid payment authorization requests. Of course, an unintended consequence is that from time to time, a legitimate merchant will be inundated with bogus product orders.

Commenting on the paper, Digitopoly's Joshua Gans points out that, under US law, that may not be entirely legal:

A few years back I contacted Yahoo and Google with an idea to counter spammers. What if for each spam email that they picked up, they responded — perhaps entering details into phishing forms? This would overwhelm spammers and they would not be able to find ‘legitimate’ responses from the gullible few. That would really alter their returns. Unfortunately, it was explained to me that such a measure would constitute an attack by a US corporation and, apparently, that is against US law.

Spam may be here to stay, then. The real solutions are technological, and don't involve fixing email so much as abandoning it altogether; the time for being able to accept free, unsolicited email from anyone seems to be coming to an end. Those who are trying to build its replacement will be happy indeed to hear that.

The full paper is a surprisingly good read; if you're looking for something to flick through on an e-reader over the weekend, why not give it a go?

Spam, spam, spam, spam, spam, spam, spam, spam, lovely spam, wonderful spam. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Brexit Big Brother is watching: how media moguls control the news

I know the Daily Mail and the Daily Telegraph well, and I don’t care to see them like this.

It would take a heart of stone now not to laugh at an illustration of Theresa May staring defiantly out at Europe from the British coast, next to the headline “Steel of the new Iron Lady”.

Those are, however, the words that adorned the front page of the Daily Mail just five months ago, without even a hint of sarcasm. There has been so much written about the Prime Minister and the strength of her character – not least during the election campaign – and yet that front page now seems toe-curlingly embarrassing.

Reality has a nasty habit of making its presence felt when news is remorselessly selected, day in and day out, to fit preconceived points of view. May and her whole “hard Brexit” agenda – which the public has now demonstrated it feels, at best, only half-heartedly enthusiastic about – has been an obsession of several British newspapers, not least the Daily Mail and the Daily Telegraph.

I know these papers well, having spent the best part of a quarter-century working for them, and I don’t care to see them like this. When I worked there, a degree of independent thought was permitted on both titles. I joined the Telegraph in 2002; at the time, my colleagues spoke with pride of the paper’s tolerance to opposing views. And when I was at the Mail, it happily employed the former Labour MP Roy Hattersley.

Would I be able to run positive stories about, say, my mate Gina Miller – who successfully campaigned for parliamentary scrutiny of the Brexit process – in the Telegraph if I were there today? Or at the Daily Mail? Dream on: it’s two minutes of hate for that “enemy of the people”.

Morale in these newsrooms must be low. I am finding that I have to allow an extra half-hour (and sometimes an extra bottle) for lunches with former colleagues these days, because they always feel the need to explain that they’re not Brexiteers themselves.

Among the Telegraph characters I kept in touch with was Sir David Barclay, who co-owns the paper with his brother, Sir Frederick. Alas, the invitations to tea at the Ritz (and the WhatsApp messages) came to an abrupt halt because of you-know-what.

I don’t think Sir David was a bad man, but he got a Brexit bee in his bonnet. I was conscious that he was close to Paul Dacre, the editor of the Daily Mail, and both had cordial relations with Rupert Murdoch. It became clear that they had all persuaded themselves (and perhaps each other) that Brexit suited their best interests – and they are all stubborn.

It seems to me unutterably sad that they didn’t sound out more of their factory-floor staff on this issue. We journalists have never been the most popular people but, by and large, we all started out wanting to make the world a better place. We certainly didn’t plan to make it worse.

People used to tell me that papers such as the Daily Mail and the Telegraph changed because the country had but, even in the darkest days, I didn’t agree with that premise. We are in the mess we’re in now because of personalities – in newspapers every bit as much as in politics. The wrong people in the wrong jobs, at the wrong time.

Would the Daily Mail have backed Brexit under Dacre’s predecessor David English? It is hard to imagine. He was a committed and outward-looking Europhile who, in the 1970s, campaigned for the country to join the EU.

I can think of many Telegraph editors who would have baulked at urging their readers to vote Leave, not least Bill Deedes. Although he had his Eurosceptic moments, a man as well travelled, compassionate and loyal to successive Conservative prime ministers would never have come out in favour of Brexit.

It says a great deal about the times in which we live that the Daily Mirror is just about the only paper that will print my stuff these days. I had a lot of fun writing an election diary for it called “The Heckler”. Morale is high there precisely because the paper’s journalists are allowed to do what is right by their readers and, just as importantly, to be themselves.

Funnily enough, it reminded me of the Telegraph, back in the good old days. 

This article first appeared in the 22 June 2017 issue of the New Statesman, The zombie PM

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