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The economics of spam

November 25, 2008 6:26pm
by Rob Minto

How much does spam cost? It’s hard to quantify in terms of bandwidth, time and effort blocking it, and general nuisance. But here’s a figure to mull over: $873m.

That’s how much Facebook has been awarded in damages against a spammer in a US court for sending unsolicited messages on the Facebook network. And if it sounds trivial in this era of multi-billion dollar bailouts, it’s a lot more than Facebook’s expected revenues for 2008 - more than double, in fact.

Facebook isn’t going to collect anytime soon as the company readily admits, but it’s supposed to act as a deterrent.

In any court sentencing there are a few factors to bear in mind. Does the sentence fit the scale of the crime? Is it an effective deterrent? Is it a suitable punishment? On any of these measures, fining a spammer nearly $1bn seems a bit pointless.

Scale: Symantec have calculated that the global internet fraud economy is worth $7bn. That’s assuming all fraudulently accessed credit cards and accounts are “maxed out”. So perhaps $873m is a little high?

Deterrent: Facebook isn’t getting the money. The spammer, Adam Guerbuez, isn’t paying up. Not much of a deterrent there.

Punishment: It’s headline grabbing, so perhaps that’s a good thing. Mr Guerbuez may not find much sympathy among his neighbours. But relying on headlines isn’t a long term solution.

Part of the problem seems to be the wildly differing fines that are bandied about by different courts. For example:

2004: FTC fines porn spammers $112k
2006: Marketer hit with $900,000 spam fine
2006: US spammer fined $11.2bn

So we have a range here from $112,000 to $11bn. I’m not sure what message spammers are getting from this, especially if they don’t have to pay.

What about jail? It does happen, but only for related offences, it seems. Perhaps being found guilty of simply sending spam could result in jail time, rather than these ludicrous fines. Would that be a better result?

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November 25, 2008 6:26pm in Internet, Software, Tech Finance | Comment

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