Another Interesting "Cost of Spam Article" from The NYTimes.
*************** July 28, 2003 Diverging Estimates of the Costs of Spam By SAUL HANSELL BLOOMINGTON, Ind., July 27 � When Indiana University installed its new e-mail system in 2000, it spent $1.2 million on a network of nine computers to process mail for 115,000 students, faculty members and researchers at its main campus here and at satellite facilities throughout the state. It had expected the system to last at least through 2004, but the volume of mail is growing so fast, the university will need to buy more computers this year instead, at a cost of $300,000. Why? Mainly, the rising volume of spam, which accounts for nearly 45 percent of the three million e-mail messages the university receives each day. Unwanted commercial e-mail, or spam, has become the bane of the Internet because it is so cheap and easy to send that all sorts of companies and individuals do so, prodigiously. Spammers these days pay as little as 0.025 cent to send an e-mail message. The computing costs for the recipients, or their Internet providers, to process each message are similarly tiny. But with billions of spam messages sent each day, all these fractions of cents start to add up to real money. Even greater are the costs of trying to block spam, catch spammers and undo the damage they cause to recipients. Gauging the cost of tiny bits of computer power and the value of many moments of wasted time, multiplied by millions of e-mail users, leads to big, if inevitably imprecise, numbers. One company, Ferris Research, says the cost is $10 billion in the United States this year. The Radicati Group estimates the worldwide cost at $20.5 billion. Another firm, Nucleus Research, shoots higher. By its reckoning, the economic cost is $874 a year for every office worker with an e-mail account, which multiplied by 100 million such workers amounts to about $87 billion for the United States. "Spam is one of those areas where we see a severe impact on productivity," said Rebecca Wettemann, research director of Nucleus. "The average worker receives 13.3 spam messages a day, which takes six and a half minutes to process. Do the math and that comes to 1.4 percent of their productive time." Not everyone thinks the sky is falling. Peter S. Fader, a marketing professor at the Wharton School who has studied e-mail, says the research firms' estimates vastly overstate the actual cost of spam. "I am deeply skeptical that these crude top-down methods are accurate," he said. "Hitting the delete key is far more efficient than carrying your physical mail from the mailbox over to the trash can." He also argues that the computers and networks that are being installed to deal with spam will be a powerful resource for processing legitimate e-mail, once spam filters and economic Darwinism tame the spam epidemic. "Spam, although it is a bad thing per se, is fostering the growth of the e-mail infrastructure," he said. But few involved in actually building that infrastructure take as broad a view as Dr. Fader. At Indiana University, Brian D. Voss, the associate vice president for telecommunications, can cite many costs of spam beyond the computers and network needed to deliver it. First, he says, is the cost of building a system to filter out spam for users who do not wish to receive it. The university is building a filter for a new $50,000 server, and it does not know yet how many of these it will need for its entire network. The task requires not only programmers but also lawyers, as the state university has to be sensitive to the First Amendment rights of the spammers. His staff also spends time � and time is money � dealing with the spam filters of other companies and universities when they reject mail from Indiana University because one of its users is thought, rightly or wrongly, to be a spammer. "The most serious cost of spam," Mr. Voss said, "is also the hardest to figure out: the loss of productivity." Using himself as an example of an active e-mail user, Mr. Voss estimated that 60 of the 100 messages he gets a day are spam. Most come overnight, because the spammers find response rates highest in the morning. So when he checks his e-mail first thing in the morning, he is rapidly tapping his delete key. "Recently came a message with the subject line, `Here is your activation code,' " he said. "In my morning haze, before the coffee sunk in, I assumed it was spam." In fact, it was the password for his new BlackBerry pager. It took three weeks for him to figure out what had happened and to request another. Deleting spam has become like exercising: a dreary chore for many, and a passionate activity for a few. "Every single day, two or three times a day, I'm erasing multiple messages that I have to spend at least a few seconds glancing at to make sure it's not something I need," said Brian Basham, a commercial and residential real estate broker in downtown Denver. "I would say I'm the kind of guy who is worth $100 to $200 an hour," he said with a snort. "By the end of the year, who knows how many hours I spent looking at this stupid stuff to figure out what's junk?" For big companies, the challenges are much the same, but on a large scale. Companies like Brightmail, MailFrontier and Sendmail offer spam filtering software that often costs $2 to $15 a user annually. In total, corporations will spend $120 million this year on antispam systems, Ferris Research said. (Or $635 million, if one would rather listen to Radicati.) At Nortel Networks, the cost of the spam filters is negligible, said Chris Lewis, its security architect, but the real economic burden is the 10 to 15 percent of the spam that still gets through. Employees still receive 5,000 to 10,000 spam messages a day, and Mr. Lewis has calculated that each costs the company about $1 in lost productivity. Most messages take only 5 to 10 seconds for the user to delete, he estimates. But "some messages use subjects that are quite good at making you read them," Mr. Lewis said. "Then there are people who get really upset and are put off work for an hour or half a day." Even worse, from a time-wasting standpoint, is when a top executive is upset or mad about spam. When top executives become angry, after all, they expect someone to do something. "If someone in senior management gets spammed," Mr. Lewis said, "it could take 20 or 30 hours of everyone's time, up and down the chain." Despite the huge volume, conveying spam is a tiny fraction of the cost of running the Internet. Since the spammers pay for Internet access based on the total network capacity they use, they have an incentive to keep each message small. Network operators say the amount of traffic devoted to e-mail is far less than that for displaying Web pages or, especially, for the swapping of music. Yet for one of the largest Internet backbone carriers, MCI, the spam explosion has more indirect costs. MCI receives a half-million complaints a month that its network is being used to transmit spam, in violation of its policy. It has what it calls an abuse desk that investigates complaints and disconnects violators. Indeed, the biggest single cost to the company is unpaid bills from the spammers it evicts. "Spammers know they are going to be kicked off, so they won't pay their first few months' bill," said Craig Silliman, the legal director for MCI's network and facilities operation. "By the time you catch them, they turn into a net loss." At America Online, which manages more than 90 million e-mail accounts, the cost of delivering the spam to users is far less than that of dealing with the problems it leaves in its wake. AOL has developed methods to winnow the processing and storage demands of spam. If a spammer sends one million AOL members a message offering, say, coral calcium, the company can spot it as spam and store a single copy for viewing by as many of the intended recipients as want to read it. America Online now simply discards nearly 80 percent of the 2.5 billion e-mail messages sent a day to addresses at AOL.com because they have been flagged as spam. While that requires processing, AOL does not have to bother storing them or consuming network time to distribute them to users. AOL's filters have become so stringent that it has actually reduced the volume of e-mail it has delivered so far this year, compared with a 70 percent increase last year, according to Joe Barrett, senior vice president for systems operations. But that stringency has its own costs: complaints from people who say their e-mail is being blocked unfairly. AOL now has 18 people in its postmaster department, who set the spam filters and take the calls from aggrieved mailers. At the same time, AOL may well derive competitive benefits from spam, now that spam filters are among the features most promoted by Internet service providers. A cost that is hard to measure is the losses from e-mail users defrauded by spammers. One rapidly growing category of e-mail fraud is what is known as phishing, in which e-mail messages purporting to be from a big company ask for credit card and bank information. When credit card numbers are stolen, account holders face the time and bother of putting things right, though most banks do not hold them responsible for losses. But if the spammer buys computer equipment from a Web site with a stolen number, the seller suffers a loss, perhaps never knowing it was an indirect victim of spam. Another rapidly growing, if hard to measure, cost of spam results from what are known as false positives: legitimate e-mail messages blocked by spam filters. In fact, there is a new job description at many companies that are voluminous e-mailers � I.S.P. relations � for those whose job it is to remove their employers' addresses from Internet service providers' blacklists. False positives are a particular concern for the Web auctioneer eBay, on whose site sellers and buyers often exchange several e-mail messages before completing a transaction. "We hear from bidders that they tried to contact sellers, and the sellers say they never heard from them, and it turns out they are both right because of spam filters," said Rob Chestnut, eBay's vice president for trust and safety. False positives have become so extensive that the research firms, which have spent so much time assessing the cost of spam and the need for spam filters, now have a new research topic. "We have a report coming out in the next two weeks," said David Ferris, who runs the research company bearing his name. "We think companies lose $3 billion dealing with false positives." --------------------------------- Travis Rabe Technology Director The Davidson Group (775) 832-8314 x108 To Unsubscribe: http://www.ipswitch.com/support/mailing-lists.html List Archive: http://www.mail-archive.com/imail_forum%40list.ipswitch.com/ Knowledge Base/FAQ: http://www.ipswitch.com/support/IMail/
