According to the report, published in the Journal of Economic Perspectives earlier this month, the costs associated with spam for the global community comes just shy of $20 billion a year, but spammers are earning only about $200 million. The authors place the “externality ratio”, which is the external costs to internal benefits, at about 100:1.
Written by Justin Rao of Microsoft and David Reiley of Google, the duo break down all the costs associated with spam and compare to the revenues earned by spammers.
Rao and Reiley write:
“We estimate that American firms and consumers experience costs of almost $20 billion annually due to spam. Our figure is more conservative than the $50 billion figure often cited by other authors, and we also note that the figure would be much higher if it were not for private investment in anti-spam technology by firms, which we detail further on.
The Atlantic notes, “Spammers are dumping a lot on society and reaping fairly little in return.”
Despite the $200 million figure being low when aligned with the high costs of spam for everyone else, for the spammer, this is still a pretty lucrative figure. Essentially, the spammer incurs little cost, instead passing the expenses on to their recipients.
Spam is costly for both businesses and individuals. Putting the whole annoyance factor aside, spam clogs up bandwidth space, is a time-waster since for those that must sort through spam in case any important emails get caught up in spam filters, and people may find their own legitimate emails getting caught up in the filters of others. There’s also the malware aspect to consider because it creates additional costs, such as money spent on software to combat it and the time spent setting up filters and/or cleaning up infected machines.
Spammers are making relatively little money in comparison to the costs they are creating, however, they won’t care since it comes at little or no cost to them. Even if millions of people ignore the unsolicited emails, yet they manage to snare a small number of people, it’s still pretty profitable for them.
So what’s the solution?
Ideally, the authors say the best solution is to find ways to make spam costly for those sending emails to decrease profitability.
“We advocate supplementing current technological anti-spam efforts with lower-level economic interventions at key choke points in the spam supply chain, such as legal intervention in payment processing, or even spam-the-spammers tactics,” the authors conclude. “By raising spam merchants’ operating costs, such countermeasures could cause many campaigns no longer to be profitable at the current marginal price of $20-50 per million emails.”
The full report put together by Rao and Reiley can be viewed here.
Over time government has tried to address unsolicited emails, such as the U.S. 2003 CAN-SPAM act, which many question its effectiveness since the “bad” spam still gets through while legitimate businesses pay the price. In 2010 Canada passed an anti-spam initiative that is considered to be one of the most stringent in the world.
The problem with government intervention, however, is that technology evolves much faster than laws, and spammers are usually ahead of the game.
Is a large web of laws truly the solution? In addition to the cost of the spam itself, there are also the costs involved with the time lawmakers spend on creating solutions to consider. Either way, the taxpayers, consumers and businesses absorb the cost.
Seems a much better option is to find ways to bounce the costs back where they belong, on the spammers. However, as simple as that may sound, the solution may not be so straightforward.