Spam Cooking Over at Yahoo!, AOL

They want to slap a fee on mass email, but will it stick?
Author:
Publish date:

Spam is still a can of worms for Internet companies.

Yahoo!

(YHOO)

and

Time Warner's

(TWX)

America Online now say they plan to charge senders for the bulk delivery of some emails. But critics of the plan abound.

Under the service Yahoo! and AOL envision, bulk email senders can choose to pay a fee ranging from one-quarter of a cent to 1 cent per message to have their email certified as legitimate. The stamp of approval will help users weed out unwanted messages and reduce network-taxing traffic, the companies say.

Yahoo! and AOL -- and Goodmail, the vendor that's providing the service -- say they are confident that they will be able to persuade skeptics of the value of the service. But some companies don't like the idea of paying for a service that currently costs them nothing.

"Having to pay an email provider to conduct legitimate business with a customer doesn't set a promising or productive precedent, and more importantly, doesn't appear to really benefit consumers," says Nicholas Utton, chief marketing officer of

E*Trade

(ET) - Get Report

, in an email.

Spam is a vexing problem. Businesses send out emails to communicate with and market to customers, but people hate getting unwanted pitches for drugs, pornographic Web sites and get-rich quick schemes, among other things.

Filters that most large companies have on their internal email networks block communications that people want, which further aggravates users. In fact, people are getting so disgusted with spam that they aren't even opening huge emails like those from banks, says Goodmail chief Richard Gingras. He says many legitimate email messages fail to reach their intended users.

In the coming weeks, companies that rely on email to communicate with their customers are going to have to decide whether the service Yahoo! and AOL will offer is worth the trouble.

"Volume senders will use this because it makes good business sense," says Gingras in an interview. "They will get a very significant return on their investments. Their delivery will be dramatically improved."

But privacy expert Ray Everett-Church says he believes the new service unfairly penalizes legitimate companies.

"Unless the major ISPs are going to require postage for 'every' email coming into their system, they will still need to accept, sort and deliver unpaid email from the rest of the world," Everett-Church says. "At that point, they'll still be dealing with massive volumes of unwanted email. The only difference is that they'll be able to offset those costs by taxing legitimate sources of email. Doesn't sound fair to me, but the world of spam is filled with inequities and bad decisions."

Priceline

(PCLN)

and

Expedia

(EXPE) - Get Report

declined to comment. Other companies, including  

United Online

(UNTD)

, are taking a wait-and-see approach.

"While it is too early to know exactly how these efforts will affect United Online, the goal of any actions we take will be to ensure that our members continue to receive necessary communications from Classmates, PhotoSite and our other brands in a timely fashion," the Woodland Hills, Calif.-based company said in an email statement.

Though consumers aren't subject to the email fees, they may be in the future.

"These e-mail providers have been spending an enormous amount of money on building and maintaining their email transport structure," says Sara Radacati, the head of a research firm that monitors the email market. "Everybody is going to be charged eventually."

By 2009, there will be 2.2 billion email boxes, up from 1.4 billion this year, according to Radicati. During that same period, worldwide spam traffic will almost double by 2009 to 228 billion messages. Overall email traffic will jump 93% from 171 billion messages per day in 2006, to 331 billion messages per day in 2009.

The current email network doesn't do a good job in distinguishing legitimate from unwanted messages, says Felix Lin, a vice president for Internet security at

CA

(CA) - Get Report

, formerly Computer Associates. He says that email may evolve into a system like the standard mail in which people pay varying rates for different types of deliver.

"Today without the service, everything is sent bulk rate. Your stuff gets the same priority as the other stuff that's filling people's in boxes," he says.

Goodmail hopes that its certification will make consumers confident that the email they receive comes from sources they trust.