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Economics of Spam - long

  At 07:34 PM 10/21/1997 -0400, Keith D Shugarman wrote:
  >Prof. Ward
  >So does spamming increase the incremental cost is the initial participation 
  >and the decrease the output and (network) value of the list?  If so is this 
  >an external cost of spamming?
          This line of reasoning has potential.  Unwanted solicitations that
  result from my participation in a discussion represent an additional cost of
  participation.  These costs reduce my participation from what it otherwise
  would have been.  By analogy, when I subscribe to a magazine, I have some
  expectation that my address will be sold to direct marketers resulting in
  junk mail.  Therefore, I do not subscribe to as many magazines as I
  otherwise would have.
          In the magazine case, junk mail need not be an external cost.  The
  magazine need not sell my name to direct marketers.  It would be profit
  maximizing and efficient to sell addresses if the price direct marketers are
  willing to pay exceeds the costs that junk mail imposes on consumers.  If
  the magazine could credibly commit (is this a big if?) to not selling
  addresses, presumably it would have to raise the price of the magazine.  It
  makes the calculation that its subscribers would prefer junk mail to higher
  prices (demand is greater with junk mail than higher prices).  Similarly,
  cable channels calculate that viewers prefer advertisements to higher rates
  for channels.
          However, in the email discussion case, the listowner and
  participants have difficulty enforcing rights to the mailing list.
  Spammers, the direct marketers of cyberspace, have means of obtaining the
  addresses without compensating the list participants (or, property rights
  are ill defined).  Spammers can impose "direct marketing" costs without
  compensating spammees, however indirectly.  There are means of making
  addresses of list participants less appropriable by spammers - the conceal
  option, anonymous remailers - but these imply costs that would not have
  needed to be incurred were it not for spamming (they count toward external
          In general, Internet discussion participants do not readily have the
  option of paying a higher fee for spam free discussion.  Or, is this what
  AOL is trying to do?  You pay a little more for AOL than you do to an ISP.
  Besides their content, they protect you from spam if you participate in
  discussions.  They are being sued on first amendment grounds as censoring
          Since my interests are moving toward the economics of information,
  this line of inquiry interests me.  I invite replies.
  Mike Ward
  Michael R. Ward                                   (217) 244-5667
  Dept. of Ag. and Consumer Econ.                   ward1@uiuc.edu
  University of Illinois          http://www.uiuc.edu/ph/www/ward1