Google and Microsoft Research: Spam Worth $20 Billion

Email 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, a Research Scientist working for Google in Mountain View, California, 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 as 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.

Written by Malcolm James

0 Comments

  1. Neil · August 20, 2012

    This is strange – I thought you were talking about making money from spam – i.e. the security industry – but you’re actually talking about the COST of spam not the WORTH of spam…

  2. Lou Yard · August 22, 2012

    I think $20 billion is an underestimate. Yes, it is a serious figure but I think it is way too low. $50 is more believable to me. $200 in revenues for spammers is also believable. OK, they do have expenses but still there is lot of money left. If there is money in spam, it will be fueled further. I wonder if revenues from spam compare to revenues from drugs – the only difference being spam is not that strongly prosecuted and the sentences, if any, are much lower.

  3. Karl Wright · August 28, 2012

    “Finally, at a worth of $20 billion, if it waits a
    few weeks, spam will be able to buy Facebook.” This actually cracked me up a
    bit. A good funny way to start the day. But he’s actually spot on, and I
    definitely pity small online businesses or even those who are simply building
    their online presence for whatever reason. Even the small enterprises have to
    invest a huge amount of money just to fight spam, and yet they’re still there,
    rearing their ugly heads every time. I’m wondering what the government is doing
    about this. They should be helping out spam fighters.

  4. James Christopher · August 28, 2012

    @Karl : Hi there, mate! You woke up a bit too late,
    ey? Anyway, you’re also right. I am asking the same question. Isn’t there a law
    that should put a stop to spam? So what are they doing about it? Perhaps they’re
    thinking, “Oh, these are huge companies. They can beat the crap out of them.”
    But how about the small ones? (your idea) I know there’s more to this world
    than spam, but we’re moving in a digital age, and soon this is going to be just
    as important as climate change and war. I hope before we get into that point,
    we already have the best solution.

  5. Mary Hernandez · August 28, 2012

    @Karl and @James, you boys are awesome! I certainly
    wish all the guys think of things that way. @Karl, you are also correct, and
    you have said one of the best thoughts to ponder on. With all these concerns
    about spam going on for many years, we should already have found concrete
    root-killing solutions. But spam is still like cancer; it continues to thrive as
    well as attack with no cure in sight. I hope this study is read by millions of
    businesses who can perhaps lobby together to the government to enforce the
    anti-spam law in full force.

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