Show Me the Money: The Economic Realities of Spam

moneyWe all know it and we all hate it. Some of us scream and kick and some of us mutter epithets under our breath. We spend inordinate amounts of time managing it and scads of money on spam filters in an effort to avoid it. No matter how you deal with it, how much you hate it, and how much you revile it, most of us can agree on one simple fact: spam sucks. No matter what the source, spam is a social disease that has entrenched itself so firmly in our work life and home life that it’s developed a sort of pop culture status, not unlike dead rock stars in bathtubs in the 1960’s or the infestation that was disco in the 1970’s. We make jokes about the spammers and find solace in the probability that they sign their names with an X and use crayons to make crude drawings that get used to order lunch.

We even assume that they make bags of money on the backs of little old grannies living off fixed incomes, and even hard-working people like you and me. We imagine that they live lavish lifestyles that make most of us tremendously jealous and permanently resentful because the pockets of honest, god-fearing taxpayers fund it all.

But do they make money? Stop and think about it for a second. It’s not like you can pick up the yellow pages and flip over to ‘Spammers and Scammers’, trace your finger down the list to ‘ACME Spamming and Male Enhancement’, dial the number and ask in the most respectful Yoruba you can muster, “hey, how much are you making peddling fake Viagra?” (as an aside, it would be pretty funny to call a spammer, tell him you’re from Microsoft, and try to help him fix his system’s security)

For obvious reasons, you can’t survey the spammers, so for the most part we have to rely on empirical data. The problem, of course, with empirical data is that we often don’t have all the facts. On a corporate level, many businesses don’t want to let it slip that they got caught with their pants down, especially if the business is publicly traded and relies on stockholder confidence. On a consumer level, many people are just plain embarrassed to have been scammed, get told by law enforcement that there’s nothing the cops can do, or correctly assume that they have no legal recourse and don’t bother reporting it. So, for the most part, we don’t really have reliable data to go on and have to make a lot of assumptions.

Terry Zink, one of my favorite people and spam guru extraordinaire, recently penned an article on the subject. Entitled “How much money do spammers make?”, Terry’s article discusses his own skepticism at attempts to apply a number to the problem, and how a recent study by several PhDs at UCSD changed his mind on the subject.

The basic premise is that crime pays. “Well, duh!” you say, but we didn’t really know whether spammers are making any money. One could assume, of course, that they wouldn’t continue to peddle their wares unless there was some money to be made, and as the UCSD study reveals, one would be correct. The researchers “reversed[sic] engineered the algorithms that spammer merchants use when they ship product (which, btw, contain mostly the correct chemicals that go into the real products).” In doing so, the researchers were able to calculate “how many orders they were processing and [multiplied] by the average price.”

In one example, Eva Pharmacy, an online purveyor of – what else? – Viagra (also referred to as a ‘men’s health’ product and even a ‘women’s health’ product, i.e., Viagra marketed to women – who knew?) is pulling down $2.4 million a month. Now, Eva Pharmacy skirts the boundary of what’s considered to be illegal, and as Terry points out, they happen to be one of the online pharmacies actually selling real product – that is, the pills they purvey contain active ingredients, unlike some other online pharmacies we’re aware of.

Terry’s notes from the presentation he attended also contain information about other spammers, and as it turns out, the economics of spamming very much resemble life outside the Interwebs, where some businesses make lots of money and others make a little. From this, we can extrapolate that some of them are living in those lavish mansions and that others, alas, probably have to settle for a nicely appointed home in an upscale African or Russian neighborhood.

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