The Dirty Little Secret About Spam

Hardigree insists that his opt-in feature separates his bulk email from spam. He can use the data he collects to aim offers at people who are more likely to be interested. And since people provide their addresses voluntarily, his pitches aren't unsolicited. Granted, opting in may be less a conscious decision than a mistake. But "it's up to the consumer to read the privacy policy," Hardigree argues. "It's buyer beware. Our privacy policy lets me do anything I want with the names. I don't."

Why it's called "spam": In a 1970 skit from the BBC's Monty Python's Flying Circus, a waitress recites a nearly all-Spam menu. Geeks love Monty Python.

This is what Hardigree does with the names: He rents them. For as little as $2 per 1,000 names -- or more if you want them sorted by gender, geography, or interests -- anyone can send email to any of the 60 million names on Opt In's master list. Opt In splits rental revenues with its data partners, the companies that generate the lists. Last year, Hardigree says, this arrangement brought in $2.2 million.

You'd be surprised who does business with Hardigree. J.P. Morgan Chase, he says, rents the names to pitch credit cards. BMG Music Service (which, like Fast Company's publisher, is part of the Bertelsmann media group) hawks club memberships. Kraft and WeightWatchers.com, Hardigree says, have also sent emails to the folks on Opt In's lists.

Of the companies that Hardigree cites, J.P. Morgan Chase declines to comment, as does Kraft. WeightWatchers.com says it ran a test in 2002 with an Opt In affiliate site, but "it was not successful." BMG Music Service says it has "no current relationship" with Opt In, but that it does send emails to "consumers who say they want to receive third-party emails."

In any case, none of the individuals on those lists have asked specifically for mail. No relationship exists between the marketer and the recipient -- only the possibility that one may materialize. No one would think twice about this if the medium were postal mail. J.P. Morgan Chase would buy a list of prospects and then pay for the paper and postage to deliver its pitch. But given email's reverse economics, J.P. Morgan Chase obliges potential customers to pay for its ads. Is everyone okay with that?

Sernovitz isn't -- but he's inclined to fault Hardigree. "We need to make sure legitimate marketers know who he is and what he does. Chase needs to know it's funding a spamming operation."

Sernovitz may be giving big marketers more credit than they deserve. If Hardigree is a bad guy -- and it's not clear whether or not he is -- what makes his clients any better? Are they simply naive? Or are they getting in on a good thing?

Lost in the Swamp

The Direct Marketing Association is the most powerful and most visible business presence in the debate over spam. The DMA sees email as the greatest boon to its trade since the telephone -- even greater, since it's free. Created to represent merchants who sold by way of the post office and battle-tested in the age of telemarketing, the DMA didn't quickly grasp the wildly different dynamics of the Internet. Sernovitz and others say it tried to impose the ethos of traditional direct marketing in a world where the absence of costs changed everything. "The DMA misunderstood the impact of email from the start," Sernovitz says.

That's why many antispammers squarely blame the trade group for protracting the junk-email war. Historically opposed to government regulation of any sort, the DMA fought even relatively modest federal and state laws that would have placed restrictions on email communications. But the group now recognizes that the rising flood of unsolicited email is making it increasingly tough for companies to deliver the few messages that consumers may actually want, such as airline-flight confirmations and brokerage notices. Most spam experts agree that in their attempt to keep spam out of their systems, ISPs and big corporations are also blocking about 15% of all legitimate marketing messages. So the DMA has come to support a bill that would require unsolicited email to have a valid return address so recipients could opt out. Marketers that fail to honor such requests would face a fine of $10 per email. "We're always in favor of self-regulation," says Jerry Cerasale, the DMA's senior vice president for government affairs. "But as the spam phenomenon has grown, we've realized that self-regulation isn't enough. Our members' mail is being lost in the swamp."