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Economics of Spam - long
At 07:34 PM 10/21/1997 -0400, Keith D Shugarman wrote:
>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
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.
Michael R. Ward (217) 244-5667
Dept. of Ag. and Consumer Econ. firstname.lastname@example.org
University of Illinois http://www.uiuc.edu/ph/www/ward1