Pay-per-email and the "Market Myth"

Pay-per-email and the "Market Myth" 295

Posted by CmdrTaco on Wednesday March 29, 2006 @11:10AM from the if-you-only-read-one-article-today dept.

Bennett Haselton has written a thoughtful piece on the latest developments in the pay-for-email schemes making the rounds from some of the big players in the world of AOL. This one is really worth your time, so please click on and read what he has to say.

AOL created quite a stir in February when they announced that senders would soon be able to bypass the company's junk mail filters by paying a quarter-penny per message to a company called Goodmail, which would split the revenue with AOL. EFF and MoveOn.org argued, in an open letter posted at DearAOL.com and co-signed by many groups including Peacefire, that once the big players were able to bypass AOL's mail filters for a fee, there would be less pressure on AOL to fix problems with non-paying senders being blocked, and that the quarter-penny would become a de facto "e-mail tax" for newsletter publishers if other ISPs followed suit.

At the N-TEN conference last Thursday in Seattle, I had the chance to talk to Charles Stiles, the AOL postmaster, and Richard Gingras, the CEO of Goodmail, after a panel discussion about Goodmail's system, where they clarified some issues. First, if you pay for a GoodMail stamp, your mail not only bypasses AOL's junk mail filters, it also gets displayed to the user with a blue ribbon indicating "This mail has been certified" -- which is a promise to the user that GoodMail has actually done a "background check" on the organization and found them to be a "good actor". (So it's mainly useful for banks, as a way of saying "This is not a phishing attack", and for charities, as a way of saying "We are a legitimate charity".) Stiles said that AOL will continue offering a free whitelisting program for people to bypass the filters, where anyone can apply to join the whitelist (even though this can be easily abused by spammers as well, but AOL offers it anyway because most spammers don't bother). If you're on the whitelist, you don't get the little blue "Certified Email" ribbon, but you do get past the junk mail filters.

So, what's everyone so worried about, if anyone can bypass the filters for free? Well, one problem is that this is where Hotmail used to be, before they started requiring senders to pay a fee to bypass their filters. At one time, if your newsletter was being wrongly blocked by Hotmail, you could fill out a questionnaire with some verification information, and they would add you to the whitelist, which is what we once did to get the Peacefire newsletter un-blocked. However, once Hotmail started using Bonded Sender, a third-party company that requires you to post a $2,000 bond in order to get on their whitelist, Hotmail revoked the free whitelistings that had been given out in the past. If your newsletter is being blocked by Hotmail's filters, no matter how many people vouch for you as a non-spammer, the only way to make sure you get past the filters is to pay the $2,000 to Bonded Sender. (I refused to pay the fee, and of the last seven messages that I sent to our press list, all of them got labeled by Hotmail as "Junk Mail".)

Charles from AOL seemed sincere in saying that AOL's free whitelisting won't go away. But he can't promise or guarantee anything, and someday it'll be someone else's decision. And other ISPs, most of which do not have free whitelists, will be tempted to use GoodMail as a de facto whitelist, such that senders that don't pay will have a greater chance of being blocked.

But I think there's a bigger problem underlying all of this. It's not about specific problems with GoodMail's or AOL's or Hotmail's system. The problem is that many advocates of these systems say that any flaws will get sorted out automatically by "the market" -- and in this case I think that is simply wrong. And in fact the people on Thursday's panel can't really believe it either, because one thing we all agreed on was that Bonded Sender sucks. But has the marketplace punished Hotmail for using it? Have people left in droves because non-Bonded-Sender e-mail gets blocked? No, because if they never see it getting blocked they don't know what happens. Free markets only solve problems that are actually visible to the user.

And this is why groups like EFF and Peacefire are rallying against pay-per-mail. We don't protest bad ideas. We protest bad ideas that could cause harm because by their nature, the marketplace will not kill them. Think about it: if AOL announced that they were going to start charging $100/month for dial-up, would we care? Would MoveOn send out e-mail warnings to its AOL subscribers? Would the EFF start a coalition against it? No, because users will abandon AOL over something like that, and the marketplace will kill it. But people don't abandon their provider over wrongly blocked e-mail if they don't even know it's happening. And thus pay-per-mail could become a de facto standard because it's invisible to customers.

If Microsoft released a new version of IE with huge ugly buttons that were hard to understand, would civic-minded groups and public advocates complain? No, because that problem will sort itself out through browser competition. It's when Microsoft releases features that have bad implications for user privacy and security, that civic groups and experts complain loudly -- because most people can't assess the privacy and security risks of using their browser, and so the marketplace alone won't solve that. (Microsoft knows this, of course, which is why they have sometimes released features that have bad implications for users' privacy and security, but they never made the buttons big and ugly.)

This is what I think people like Esther Dyson don't understand, when she wrote her editorial in the New York Times: Partly she wrote why she thought GoodMail was a great idea, but mainly she wrote that she didn't see why EFF and other groups were so upset, when if the idea turns out not to work, it will die in the market. "If they [AOL] don't do a good job of ensuring that customers get the mail they want, even from nonpaying senders, they will lose their customers." But that's simply not true. Hotmail subjects anyone to random blocking who doesn't pay the $2,000 Bonded Sender fee, and there's no evidence that it has caused them to lose customers.

Private companies do not have the absolute right to do whatever they want with your mail. If you sign up to receive mail from someone, and they send you an e-mail, then that e-mail is your property; if your ISP knows that the sender is almost certainly not a spammer, then they are violating the sender's and receiver's rights if they block the message. (Not First Amendment rights -- those only apply to government laws -- but rights based on contracts and implied warranties, since I think an e-mail address comes with an implied warranty that your contacts will be able to send you mail for free. So stop composing your -- yes, this means YOU -- stop composing your message saying that First Amendment rights don't apply to private companies.) EFF and other advocacy groups are working on anti-spam solutions that respect these rights, and you may agree or disagree with their proposals. But the point is that they should be commended for realizing that the marketplace will not preserve these rights "automatically".

After the N-TEN panel on Thursday, since I had sent a "communication" to Richard Gingras from Goodmail by asking him a question, I handed him a penny and reminded him that, per his agreement with AOL, he had to give half of it to them. I hope I never have to pay Goodmail anything again to get my message through, and I hope you never have to either.

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