February 9, 2006, 12:00 AM

AOL and Yahoo’s plan to charge for VIP e-mail kicks up a storm

AOL and Yahoo soon will charge companies between a quarter-cent and 1 cent per opt-in e-mail to have their marketing and other volume e-mails authenticated and certified to bypass filters and junk mail boxes.

Kurt Peters

Executive Editor

 

The virtual bouncers at AOL and Yahoo will be lifting the velvet rope for retailers and e-mail service providers that pay to have their e-mail messages certified. The e-mail giants soon will charge companies with existing relationships with customers between a quarter-cent and 1 cent per opt-in e-mail to have their marketing and other volume e-mails authenticated and certified to bypass filters and junk mail boxes and travel directly to consumers’ primary e-mail boxes. The program is optional. Individual consumers do not pay fees.

The news is polarizing players and pundits. Some industry observers are referring to the new system as the equivalent of an electronic postage stamp; others label it Internet taxation. AOL, Yahoo and Goodmail, the e-mail certification vendor with which the two companies contracted, say the system is akin to the U.S. Postal Service’s certified mail: It ensures a recipient receives a message and provides the sender with proof of delivery, via a collated report. And, they say, it helps do away with junk e-mail, identity theft scams and phishing.

“Certified e-mail creates a class of e-mail that allows consumers to easily see a message is authentic,” says Richard Gingras, CEO and co-founder of Goodmail Systems. “We’ve made great efforts with AOL and Yahoo to ensure legitimate messages are clearly seen by consumers as legitimate.” Additionally, it offers a class of e-mail to companies that they can use to more successfully communicate with consumers, increasing successful delivery and open rates and ensuring proper rendering of images and HTML links, he says.

Many, however, see disquieting implications. It’s a troubling but exhilarating issue, says Donna L. Hoffman, professor and co-director of the Sloan Center for Internet Retailing at Vanderbilt University.

“We have reached the point in the commercialization of the Internet where it is appropriate to have discussions about changing the economic model,” Hoffman says. “In principle, it is interesting charging for different levels of service. But this particular model raises a lot of troubling issues.”

Hoffman notes that AOL and Yahoo have contracted with just one of many potential vendors, Goodmail. “Further, Goodmail will only do this with companies who have existing relationships with their customers. If they already have relationships with their customers, why should they then go through Goodmail?” she adds.

In addition, Hoffman contends that such costs-which would amount to $2,500 to $10,000 per 1 million e-mail messages-could harm small businesses. “There is no way small companies can afford to do this-these hundreds of thousands of small retailers the Internet has allowed to flourish,” Hoffman says. “And what about consumers who already are comfortable with their retailer relationships? You can start to look at it as a tax when retailers have permission-based relationships with their customers but be charged to deliver e-mail to them. At the end of the day, consumers and small businesses are going to get screwed.”

The e-mail providers, however, see the new system as another step in the evolution of protecting their subscribers from Internet threats and abuses.

“Our highest priority has always been to protect users from spam and e-mail scams, and to deliver to users the e-mail messages they want and value,” says a Yahoo spokeswoman. “We continue to innovate and explore new methods to protect the inbox, and as part of this, Yahoo is planning to test the Goodmail certified e-mail system in the coming months.”

Some companies believe such a view is too one-dimensional for what they see as a highly complex business issue with far-reaching implications.

“You are penalizing legitimate senders,” contends Des Cahill, CEO of Habeas Inc., an e-mail certification company. “Money being spent on postage or a tax is the wrong way to spend. What the industry has been asking legitimate companies to do is invest in improving their e-mail practices, use authentication technology, segment their lists, opt people out promptly. So if chunks of company budgets suddenly are going to paying postage, how will they invest in more efforts to clean up e-mail databases and processes?”

Overall, this development proves that the industry still is trying to figure out “the e-mail problem,” says Sam Cece, CEO of StrongMail, a vendor of e-mail infrastructure software. “I’m not jumping on the hysteria bandwagon,” Cece says. “I think restoring trust to e-mail is good. But people still are trying to figure out what the AOL/Yahoo effort is all about.”

 

 

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