by Dana Blankenhorn
Volume VI, No. XIV
For the Week of April 8, 2001

This Week's Clue: A Spam Solution

The headline writers at "Wired" had it right no matter how the Direct Marketing Association might have howled - "Spammers Slam Anti-Spam Proposals."

The DMA also is right. Spam wants of a legislative solution. Instead, I propose to make money off it. Let's start with what we know. Spam is the Internet's pollution. Spam clogs the Internet's arteries. It keeps everyone from getting the bandwidth they pay for. It raises costs for hosting, it reduces total e-commerce and (most important) it's getting worse.

The chief victims of spam are Internet Service Providers (ISPs). They try to pass this cost on to their customers, but the results are uneven. The dirty fact is, however, that some ISPs benefit from spam. While most have updated their "acceptable use policies" to ban not just spam, but spamware and spam service sites, a few haven't, and there's a big Clue here. Effective anti-spam action isn't being taken through a law created by a legislature. It's being done through clauses in contracts.

Second, it's obvious that, as the telecomm industry's financial crisis has deepened, a few renegade ISPs have opened the floodgates on their rivals, with the aim of driving them under. This is the business equivalent of terrorism. If you're taking money from spammers, and passing the costs of spam on to rival companies, you're a predator, not a competitor.

I know the spam flood is getting worse because I've always kept a wide-open e-mail address, in order to monitor spam trends. Since last fall the amount of spam I get per day has jumped three-fold. (In 23 days I counted 720 spams, over 30 per day.) The spam itself has also gotten nastier, not in the offers it makes but in the damage it does to my computer. (It has also gotten more "established," with phony publications and even "brands" with names like "E-Mail Savings" appearing in my spam box.) Every few days I have to completely re-boot because some spam message has taken over my e-mail program, or demanded that I open my browser.

On April 2 the Federal Trade Commission announced yet-another offensive against what it calls "illegal spam," spam featuring offers that are illegitimate. These include stock scams like the spam I got urging an investment in Wasatch Pharmaceuticals, a supposed drug operation that's actually trying to be a finance company for skin disorders, and whose stock was recently trading at .6 cents per share. They include the "credit-repair" scams that come in with tag-lines like "make your creditors cringe," the phony drugs like "no prescription Viagra alternative" and get-rich-quick scams like "the new way to make money." (Examples of these and the other spams noted here are all in my inbox right now.)

These are just a tiny portion of the spam flood, however. The FTC proposes to do nothing about illegitimate distributors of legal products, from cell phone plans to Plantronics head sets to credit card processors. The FTC proposes to do nothing about the "detectives" and "domain name sellers" who bombard me with garbage. And it certainly won't do anything about BestBuy, Amazon and Williams-Sonoma, who think that because I bought from them in the past they have permission to spam me forever - they don't. (Direct marketers age paper lists, but not e-mail lists - this has to change.)

The key to a solution from the user's perspective is the word permission. The keys to enforcement involve identity and audits. The enforcement mechanism must be built by the victims, Internet Service Providers.

Here's the plan.

We form a company, owned largely by ISPs, to police the industry. We build a database, not of spam messages, but of people. This will be a universal "don't do business with" list of names, attached to a universal proof of identity like a Social Security number (or drivers' license). When anyone wishes to do business with a subscribing ISP, that ISP looks them up in this registration database, and if they're on the list, they refuse the business until certain conditions (set forward in a few paragraphs) are met. (If it's a business account, that account has to give its executives' names, and those names will be run through the database.) The company can charge for the look-up service.

In joining with the company, ISPs also agree to certain standards in the acceptable use policies of their contracts. They agree to ban spam, spamware, and spam enabling companies from their networks. They agree to abide by the blacklist. They agree to pay a fine on all spam incidents traced to them, the size of the fine depending on the level of damage to others. (This is another way to make money.) They agree not to peer with, and not to provide downstream service to, ISPs that won't sign-on. The fact is that most of the U.S. spam problem can be traced to a very small number of gangs.

How does someone get off the blacklist? By having their mailing lists audited, through a company like Whitehat Interactive.

A mailing list auditor checks to make sure that the people on a list have given permission to be on it. The best mailing list companies guarantee this with "double opt-in" procedures, such as the one used by A-Clue.Com. You sign up, we send a message asking for a confirmation, and you confirm you really want to be on the list. (You can get off the list at any time with a single note, and addresses that bounce messages several times running are taken off automatically.) A-Clue.Com could be audited at any time - our mailing list manager has the proof of each subscription.

The company could guarantee itself a profit by owning an auditor, and by conducting audits on behalf of marketers, but it should also set standards for other auditing and e-mail marketing firms to encourage competition. The costs of these services will encourage legitimate e-mail marketers to "age" their lists, and remove addresses of those who don't buy.

This is a private company. This is not government action. This is enforced by contracts and arbitration, not by courts. If brokers and insurance companies can force you to arbitrate your disputes with them through contracts, ISPs can do the same among themselves. This system can also be extended around the world - ICANN's reach goes around the world. Best of all there's a business model here - look-ups, fines, and audits represent real cash flow.

Instead of fighting spam, you refuse to do business with spammers, and ISPs who host spammers. (This can be extended to the growing problem of phone spam and fax spam, which haven't responded to law or the moral suasion of interest groups.) I even know someone with the contacts, capital, technical expertise and reputation in both the ISP space and the marketing space to build this business and make money from it. But Rodney's not the only possibility - the folks at Spamhaus could also do it. Want a third candidate? OK.

The key to solving any problem is to make the solution profitable. Every business problem is an opportunity waiting to be taken.

SSP (Shameless Self-Promotion)

Let's try some viral marketing. You can download the animated .gif file (from Thom Reece) now on the upper-left side of our home page, and copy it onto your own Web site to show that you're Clued-in and you want your business partners to get a Clue too. Clicking directly on the graphic leads to our subscription page. Next week I hope to offer the same graphic as part of the .HTM edition of a-clue.com, and its goal is very simple - 1,000 new subscriptions in the next month. I'm not paying for them because I'm not charging for them. Let's see if this Internet thing still works.

Meanwhile my own brand is changing. A-Clue.Com is still around, Have Modem, Will Travel is still around, but the brand to buy now is DanaBlankenhorn.Com. Here you will be able to buy my latest PDF book, "Boom, Bust & Beyond," order the print version, as well as purchase all my other fiction and non-fiction work. (It's a work in progress.)

I still write for Boardwatch and BtoB, but if you need some writing, editing, or consulting help don't hesitate to call on me

The Print on Demand version of "Living on the Internet" is also available for purchase at BookSurge.Com, for $29.99. And you can get the PDF version for just $7.99 (such a deal). The March update to the book is coming, and it's easy to get on the list via e-mail.

Remember that it's journalism that keeps the Clues coming...

Shameless Promotion

A list is only worth the permission it's based upon. Auditing and aging your list are the only ways to know you really have permission to pitch - the first step on the road to getting them to sign on the line which is dotted. That signature is your bottom line. Everything else is just cost.

Take the first step toward making your lists truly valuable with help from my friends at Whitehat Interactive - click here to begin. They've got a Clue.

Takes on the News

Cisco's Biggest Problem

Like Microsoft, Cisco doesn't really innovate. It waits for other companies to innovate, then buys them. Thus its biggest problem is its low stock price, which makes it harder for Cisco to acquire companies without dilution to current shareholders.

There's a second problem, however. Cisco's great talent is in picking companies to buy. It finds technologies that are a year or two ahead of the market, buys their creators, then invests to make sure it can dominate the new market when it arrives. Its strength then becomes its Web-based distribution system. It's goal is not to become the Microsoft of networking, but the Dell.

Where's the big money coming from? It's coming from 802.11. But Cisco is not a major vendor there. Its first acquisition in 802.11, Aironet looks like a losing bet. Instead the sector is dominated by outfits like Alvarion, Karlnet, Proxim and Sunstream Wireless. None may be worth Cisco's buying because they lack cutting-edge technology (although you shouldn't take my word on it).

Cisco is trying to jump ahead through a deal with Intersil creating an 802.11g client reference design, which can support speeds up to 54 Mbps (the speeds of 802.11a on 5 GHz frequencies) using the 2.4 GHz frequencies of today's public Wi-Fi operators. (Cisco also bought Radiata, a player in 802.11a chip sets.) Unfortunately Cisco and Intersil are stuck in court with Proxim on 802.11 technologies and lawyers make law, not product.

Cisco's idea is sound. It wants to be on the high end of 802.11 product lines as the market wave approaches. Cahners estimated the Wi-Fi market at $1 billion for 2001 (not big enough to help Cisco) but $4 billion in 2004 (plenty big enough to help Cisco). The question is whether the company can execute, and what Wi-Fi Cowboys will be forced to buy while waiting for it to do so.

Who Was Right On AOL Time Warner

I don't like to brag, but I distinctly remember writing a column for ClickZ early in 2000 headlined, "The Dumbest Merger Ever."

The subject was the deal by Time Warner to be acquired by AOL. I said the synergies were a mirage.

That wasn't the only thing that was a mirage. AOL's own earnings were a mirage, it turned out. Now the company is taking a $54 BILLION (that's with a B) charge to write down its goodwill on the deal. Goodwill is one of the great scams of accounting, representing the difference between the real value of assets and perceived value.

Oh, and the "Financial Times" has begun speculating the whole complex might be broken-up. In the present environment that would likely leave the pieces available at fire-sale prices to the other "big media" outfits - Fox, Viacom, and Disney.

If they'd had a Clue they wouldn't have merged at all.

Is Attention All That Matters

Early Web ads were sold based on direct marketing metrics like clickthroughs and conversion rates. These resulted in real money going into advertisers' pockets. But since the link between seeing an ad and buying a product can be quite indirect, these metrics failed to convince advertisers the medium had value.

The biggest sites have now abandoned those older formats for pop-ups, pop-unders, Interstitials, full-page TV-like wash-over spots that cover content and other, more intrusive nasties that start as banners or buttons but suddenly fill most of the screen when you mouse over them. Evidence is piling up that these ads do draw attention and are remembered.

When Slashdot began supporting these formats recently, however, it found itself forced to alienate its user base by offering to deliver stripped-down pages for an extra charge. What this proves is the ads may be generating the wrong kind of attention. When people get mad about ads, they get mad at both where they run and the advertiser running them.

A balance has to be struck. Sites must restrict the number of ads they run on pages, even if that means taking less (although exclusivity agreements can, over time, mean they actually get more). Researchers need to closely examine what kind of attention intrusive Web ads are getting - if it's negative attention (and that can vary by ad) creative must change. Ways must also be found to integrate these new branding metrics with direct marketing metrics so Web ads can truly be all they can be.

Clued-in, Clueless

Clued-in is the Los Angeles Department of Water and Power, which joined the move toward municipal networking. Leasing capacity on its 260-mile network will help pay for its own networking costs. Cable companies are irate at the competition, but when the municipal network is built why should the taxpayers' money go to waste? The buy vs. build decision was made years ago.

Clueless is Yahoo's move to sneak opt-out spam through its registered users' mailboxes. The move comes just as Yahoo is trying to demand that users pay for mail services.

A-Clue.Com is a free email publication, registered with the U.S. Copyright Office as number TXu 888-819. We're on the Web at http://www.a-clue.com.