Google, Microsoft Researchers: Spam Worth $20 Billion

money_grabEmail spam has plagued all of us for some time now, but we’re helpless to do much about it. We instinctively know that it has some kind of impact on us, either economically or otherwise; but we try not to spend too much time thinking about the implications. Why? Because spam sucks, short and simple. To give spam any more thought than the time it takes to drag an email to the trash would feel like giving in, like we’re being defeated by the filthy stuff.

But then we’re constantly plagued with studies, research papers and articles that go out of their way to tell us just how much spam we’re dealing with. It seems that you can’t blink these days without finding yet another diatribe on the impact of spam. So we tune out the noise, especially those articles that use made-up numbers like ‘bajillion’ and ‘gazillion’ to express just how devastating spam is on our connected lives.

Sometimes, we do have to listen, though, especially when two researchers who used to work for Yahoo! publish a paper on the economic realities of spam. Why? The trite answer is that it’s interesting stuff, but more importantly, it’s our job to understand what the spam influx is costing us, our companies, and society as a whole. If these two researchers are correct, then their paper is an eye-opening perspective on the social disease known as email spam.

Justin M. Rao, a Research Scientist at Microsoft in New York, and David H. Reiley is a Research Scientist working for Google in Mountain View, California, and together they completed their article “The Economics of Spam” while working as researchers for Yahoo! in Santa Clara, California. Their article was published in July’s issue of the Journal of Economic Perspectives, and the co-authors waste no time pinning a number on spam’s ugly head, putting their estimate on the financial impact of spam to American firms and consumers at a whopping $20 billon.

“Our figure is more conservative than the $50 billion figure often cited by other authors,” Rao and Reiley state, “and we also note that the figure would be much higher if it were not for private investment in anti-spam technology by firms.” The two also hail the work of some “crafty computer scientists who have infiltrated and monitored spammers’ activity,” and estimate that “spammers and spam-advertised merchants collect gross worldwide revenues on the order of $200 million per year.”

Seriously? $200 million? Maybe we need to start sending the spammers emails asking them to help us get money out of the country. Look, these numbers are estimates, but they’re estimates based on a bevy of research and evidence. And they have a disturbing ring of truth.

Rao and Reiley point out that almost all spam is illegal under current laws, and that for years there has been a “strategic cat-and-mouse game between spammers and email providers.” They also examine how the “market structure for spamming has evolved from a diffuse network of independent spammers running their own online stores to  a highly specialized industry featuring a well-organized network of merchants,  spam distributors (botnets), and spammers (or “advertisers”).” In short, spam is not only a business, but it’s big business.

What’s in a number?

So how did the researchers arrive at $20 billion, a number greater than the GDP of more than a hundred countries ranging from Equatorial Guinea to Niue? To begin with, Rao and Reiley included the wasted time that users spent dealing with junk email, as well as the cost of missing important messages that were flagged false positives.

They also included the cost of server hardware, which “requires more than five times as much capacity as would be required in the absence of spam,” as well as the cost of spam prevention services “provided by firms to reduce the burden on end users.” They admit that the ‘social cost,’ tallying the number of hours lost dealing with email spam, was a challenge, and that they examined “success rates of spam in influencing consumer behavior, and [used] these to infer how many spam messages must have gotten through.”

All in all, it’s a great read, and brings to light issues that you might not have considered, as well as issues that one might have inferred and which are now backed with some bona fide research. Perhaps the most impactful takeaway is the numbers themselves, which seem to indicate that we’re getting nowhere in the fight to end the financial impacts of spam.

Finally, at a worth of $20 billion, if it waits a few weeks, spam will be able to buy Facebook.

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