How a technology to stop spam could add costs to retailers’ e-mail marketing campaigns
By Mike Adams
Sometime in 2004 or 2005, the world of e-mail will likely experience a dramatic overturning of e-mail marketing strategies and infrastructure. Implications for online retailers are enormous. The catalyst? Spam, of course.
Thanks to spammers, users’ inboxes are highly polluted with irrelevant commercial messages. The problem has grown to the point where there is widespread agreement that something must be done to stop it—even something as radical as changing the very rules governing the sending and receiving of e-mail.
As we all know by now, legislation hasn’t stopped spam. Anti-spam software doesn’t help much either, since spammers can outsmart software algorithms with random word “poetry.” One of the most viable solutions now on the drawing board is a technical one that’s been dubbed the “Penny Black solution” or “puzzle solution” and is backed by Microsoft. Bill Gates has promised to end spam by 2006, and this puzzle solution seems likely to be the key to delivering on that promise.
What is it?
This article explains how this puzzle solution will impact your business. You’ll learn how it works, what it means in terms of your interaction with customers and what you’ll need to do to be puzzle solution-compliant by 2006. The implications to Internet retailers are potentially very large.
The only thing that prevents your physical mailbox from being flooded with thousands of offers every day is the fact that direct mailers have to spend money on postage. If postage were free, you’d be inundated with so much physical mail you’d have trouble finding your mailbox, much less the mail you really want.
That’s what’s happening with e-mail: spammers pay practically nothing to send e-mail, so there’s every incentive to keep sending as much as possible in the hopes that somebody will buy something. The puzzle solution seeks to impose an indirect cost (“friction”) on sending e-mail. If e-mail costs even a penny to send, spammers are instantly out of business since they can’t recoup even one penny per e-mail by indiscriminately spamming people with irrelevant offers.
There’s no real penny involved here, though. The puzzle solution adds a cost to sending e-mail by requiring an expenditure of CPU cycles, not money. Under this solution, a mail server (the machine in your company that sends your e-mail) would have to spend approximately 10 seconds of CPU time to solve an encryption puzzle and stamp each outbound e-mail. It is this 10 seconds of CPU time that results in adding costs to the sending of e-mail, and it is precisely this friction that stops spammers cold.
If the puzzle solution is adopted by the Internet community, it will likely be based on the mathematical algorithms already devised by Microsoft engineers, which will probably be distributed to the software developer community free of charge. These algorithms will require sending mail servers to execute a routine of computational gymnastics for each e-mail waiting to be sent. Because the computed solution is unique to each e-mail, mail servers cannot run these calculations ahead of time and, for example, queue up a stack of solved puzzles. Rather, they must process each e-mail as it is about to be sent. The end result is a significant slowing of outbound mail servers.
On the receiving side, ISPs and other organizations are free to decide whether they wish to pay attention to puzzle solution stamps. There is a tiny cost associated with analyzing incoming e-mails to verify their puzzle solution status, but this cost is marginal, perhaps a few thousandths of a second in CPU time, and is vastly offset by the benefit of rejecting e-mails that aren’t stamped with the puzzle solution.
Because of the simplicity of checking for puzzle solution compliance and the tremendous cost benefit of avoiding spam, ISPs and organizations have every incentive to filter incoming e-mail based on puzzle solution status. Activating this filter will be no more complicated than the IT team downloading and installing the latest “puzzle solution compliant” update of their mail server software.
The puzzle solution will be transparent to end users, e-mail marketers, and everyone but the IT personnel. End users who send and receive very low volumes of e-mail on a daily basis will notice no difference. Marketers sending e-mail newsletters or updates to small lists (up to a thousand recipients) won’t notice much difference either. But organizations that engage in high-volume e-mail activities will notice a big difference indeed: the sending of e-mail will suddenly become more costly in time and resources.
The cost of compliance
Today, a company can easily send 100,000 e-mails per hour using a single PC running mail server software. The cost of the server is only a few thousand dollars, and there’s no incremental cost for each e-mail.
Under the puzzle solution, however, a single mail server can send only one e-mail every 10 seconds. That comes out to 360 e-mails per hour, or around 8,600 in a day. A list of 100,000 e-mails would require 11 days to send.
That’s the difference: one hour today vs. eleven days under the puzzle solution.
So, without any infrastructure changes other than updating the mail server software to be puzzle-solution compliant, a retailer could send 8,600 e-mails per day. If a marketer wants to send more e-mail every hour, there’s only one way to do it: buy more machines.
With a farm of 10 e-mail servers, you could send 86,000 e-mails per day. Every e-mail would be stamped “puzzle solution compliant,” and all e-mails would be accepted by the receiving servers.
This addition of servers is, of course, expensive. And that’s precisely the point of the puzzle solution: by making the sending of a large volume of e-mail expensive, spammers are stopped cold. Not only that, but legitimate e-mail marketers will get more discriminatory in sending e-mail. All those free daily e-mail newsletters will vanish and be replaced by weekly or monthly e-mail newsletters. Suddenly, sending a daily e-mail to 100,000 subscribers isn’t free.
0.5-1 cent per e-mail
The upshot of all this is that many companies will choose to outsource the e-mail puzzle calculations or build their own in-house server farms. In the weeks and months following any puzzle solution announcement by the major ISPs, we will likely see many companies offering outsourced puzzle solution calculation services.
Based on my calculations, the likely cost for outsourced e-mail puzzle calculations will be from 1/2 to 1 cent per e-mail. So sending a newsletter to 100,000 subscribers will cost $500 to $1,000. That may seem like a lot, but compared to physical mail postage at $37,000, e-mail is still inexpensive.
You could also build your own in-house mail server farm. Ten mail servers running puzzles 24/7 could be built for under $100,000, but of course server management and personnel costs go up from there.
It’s a lot more expensive than what we’ve all been used to. This is where the criticism of the puzzle solution surfaces: many consider it too expensive for legitimate e-mail marketers. Consider, however, that for the first time in years, the e-mail channel would be virtually pollution-free. The e-mails that do get sent will very likely be read. End users won’t have to wade through hundreds of spam e-mails each day, and they’ll pay far more attention to the e-mails they do receive. E-mail would, without question, experience a resurgence in credibility and utility. E-mail open rates would surge.
No guarantee
There’s no guarantee that the puzzle solution will become the spam solution chosen by the Internet community. It presently appears to be the most viable solution for stopping spam, but there are political and technical barriers to its widespread implementation. The estimate of 10 seconds per e-mail isn’t set in stone, for one thing.
There’s also the risk that the puzzle solution technology could somehow be cracked, meaning that hackers would find a way to bypass the 10-second requirement and send counterfeit stamped e-mails at a million per hour, spam-style. Microsoft hasn’t released technical details, and no source code is available to the developer community, so no one can yet say whether the technology will be secure.
What is clear, however, is that the Internet community is determined to stop spam, and the subsequent costs to legitimate e-mail marketers will not be their primary concern. ISPs like AOL are buried under a costly avalanche of spam, and enforcing something like the puzzle solution would save them millions of dollars each year while enhancing the user experience of AOL customers.
The fact that such solutions will cost you an extra $1,000 every time you e-mail 100,000 subscribers is simply not their concern.
The puzzle solution also has ramifications on the consumer side of e-mail as well. Since ISPs would be reviewing e-mail for the stamp of approval, personal e-mails would have to be stamped. That means that the ISPs will have to run their customers’ e-mail through server-solving puzzles. But since the e-mail sending/receiving formula is asymmetrical, that is, consumers send far less e-mail than they receive, ISPs would experience a net savings.
The most likely scenario would be ISPs limiting the outbound e-mail volume of users to, say, 50 e-mails per day. That translates into 500 seconds of CPU time per day per user, which is a little over 8 minutes. The average user would typically send far less than that, and some users would send no e-mail, so the actual expenditure of CPU time per user might be only 1 minute on average. This means each outbound mail server at an ISP could handle the outbound e-mail demand for 1,400 members or users on an ongoing basis.
Free e-mail is history
Large ISPs like AOL would need lots of outbound mail servers to support a user base of millions of people, of course. But under the puzzle solution, they could take all the incoming mail servers currently handling spam and reconfigure them to run puzzle calculations for their members’ outbound e-mail. If additional servers are needed, adding them would be inexpensive, since the puzzle solution takes the same 10 seconds even on slower, less expensive machines thanks to its CPU calibration logic. Meanwhile, ISPs would be greatly enhancing the user experience of their members thanks to the halting of incoming spam.
Whether it is the puzzle solution or something else, the rules of sending and receiving e-mail are about to be scrapped and rewritten. There’s little doubt that the days of sending unlimited volumes of e-mail for free will soon be history. Simultaneously, e-mail as a permission marketing medium will finally get the credit it deserves for being a fast, low-cost, personalized communications medium that can enhance company/customer relationships at many levels.
Mike Adams is CEO of Arial Software LLC.
