Direct Electronic

Marketing

 

A white paper on the issues of

Direct distribution of commercial

Information via electronic mail.

 

 

 

 

 

 

 

 

Association of Online Professionals

June 1, 1998

Introduction

The exact origin and derivation of the term "spam," as applied to the posting of electronic messages on the Internet, is not known.

Some accounts attribute the term to a sketch on the Monty Python television series in which Vikings who loved the Hormel meat product named Spam sang the word over and over, rising in volume until the other characters found it impossible to hold a conversation. The term may also have been an acronym related to "Simultaneous Posting of A Message."

Whatever its origin, the term today is a battleground over the issues of commercial development of the Internet, privacy of the individual, infrastructure bandwidth and Internet etiquette.

The term itself has had several incarnations in the online and Internet communities. But its most recent and common form was to refer to the act of posting an individual message to numerous Usenet Newsgroups. Specifically, the term applied to excessive multi-posting of the individual message , generally agreed to be a posting to in excess of 20 newsgroups. Notably, cross-posting (that is, posting to numerous Usenet newsgroups but identifying all in the "Newsgroups:" line of the post) is considered less aggravating because the message then occupies only one space on the News Server.

This rather clean contemporary definition of "spam" served a utilitarian purpose beyond lowering the aggravation of users of the Internet during its pre-commercial days. There was a very real need to keep utilization of servers and message traffic to the smallest levels possible to conserve academic and research resources.

The exact path by which the term "spam" came to encompass commercial or marketing messages is not known. But one of the more critical events in the term’s migration came with the postings of attorneys Canter and Siegel. These two attorneys gained infamy by ignoring all known Internet protocols and conventions in their pursuit of green-card business among immigrants. Their multi-posting efforts gained them the permanent enmity of Internet and Usenet users, as did their unwillingness to cease their efforts once informed of their breach of ‘Net manners.

Unfortunately, this occurred at the same time as the explosive growth of the Internet by consumers. In a classic case of imperfect logic, two Internet conventions (one barring messages with commercial content, the other barring spam) became intermingled and both lumped under the general expression of "spam."

 

As consumers poured onto the Internet in 1994-1996, the sheer number of news users ("newbies") overwhelmed the online community and made the maintenance of the tightly-integrated Internet culture virtually impossible. Despite very strong efforts by experienced Internet users to maintain their traditions and definitions, the communication became garbled.

Whatever its traditional definitions and usage, the term "spam" today may be taken or mistaken to refer to:

• Any message posted to multiple Usenet newsgroups, either as a multiple or cross-posting.
• Any message posted multiple times to a single or multiple newsgroups.
• Any message with commercial or marketing content.
• Any message, regardless of content, that is posted to multiple recipients.
• Any message that the recipient does not wish to receive, or which is unsolicited.
• Any message that the recipient has not specifically authorized in advance of its transmission.

Given that the internet is transitioning to become a commercial entity in which some forms of marketing and sales messages will be accepted and essential, such an imprecise definition is counterproductive and can only serve to limit the development of electronic commerce.

At the same time, there remains a need to protect Internet consumers and users from unwanted, unnecessary and fraudulent message traffic, and to continue to protect the infrastructure of the Internet from the problems created by massive postings of messages, either commercial or otherwise.

This white paper sets forth more workable definitions for the various classes of electronic messaging, and specifically differentiates between "spam" and other forms of commercial messages, including a new class of direct electronic marketing messages. It also presents a discussion of the problems inherent in direct electronic marketing, and the potential detriments of such programs to both consumers and the online community. Finally, it presents recommendations related to legislative and regulatory initiatives in this area.

 

Definitions

It is not the intent of this paper to alter Internet culture or common usage of terminology. However, the confusion and imprecision assigned to the word "spam," as well as possible implications for trademark infringement, indicate that it might be helpful to present new definitions for purposes of discussion.

This paper will use the following terminology:

• Multiposting of Messages – this term will be used to describe the posting of an identical message to more than 20 UseNet newsgroups, or to the acting of posting the same message to a single newsgroup at one time.

• Off-Topic Posting of Messages – this term will be used to describe the posting of a message to a Usenet newsgroup that is not relevant to the topic, purpose or discussion underway in the newsgroup.

• Cross-Posting of Messages – this term will be used to describe the legitimate posting of a single message to multiple Usenet newsgroups, where the header information for the message clearly identifies all of the receiving newsgroups and where the message is appropriate and on topic for all.

• Direct Electronic Notification – this term will denote the process of sending an electronic message to multiple recipients, either solicited or unsolicited. The Notification message is not commercial in nature, but oriented toward news and information (e.g., distribution of e-zines).

• Direct Electronic Marketing (DEM) – this term will be used to describe the process of directing a commercial message via electronic mail to a selected group of recipients. The message may be either solicited or unsolicited.

• Solicited Electronic Mail – electronic mail may be considered "solicited: when the recipient has a pre-existing relationship with the sender. That relationship is generally based on prior purchases, an expression of interest in products or services, provision of personal marketing information to the sender, subscription to a service or list, or other action on the part of the recipient to identify himself or herself to the sender as an interested party. Electronic mail may be considered unsolicited when no such relationship exists, as when the sender acquires or purchases a marketing list from another source.

• Commercial Message – a message will be considered commercial in nature if it (a) directly or indirectly presents products or services for sale or barter, or (b) directs the recipient to a server or site where products or services are offered for sale or barter, or (c) provides information in an effort to induce the recipient to take another action that will lead to the purchase or barter of a product or service.

• Spam – this term will be used to describe a food product compiled and marketed by the Hormel Foods Corporation, and will not be used in any manner to refer to electronic mail or messages in the remainder of this document.

 

AOP Policies

The Association of Online Professionals opposes any action, program, system or endeavor that corrupts the legitimate use or integrity of the channels of electronic communication.

This policy is explicitly stated in the AOP Code of Professional Standards, Section 7, which reads as follows:

Members shall not knowingly create, acquire, distribute or allow intentional distribution of materials that violate the legitimate use or integrity of the channels of electronic communication, online services, computer systems or their contents.

Consistent with this policy, AOP does not support the practices of Multiposting of Messages or Off-Topic Posting of Messages. It is the believe of the Association that persons who deliberately engage in these practices should have their access to the Usenet and other online lists, discussion groups or message bases terminated. This policy is not intended to affect the legitimate act of Cross-Posting of Messages.

Similarly, AOP does not support or condone the communication of information that is deliberately misleading or fraudulent. This is stated in the AOP Code, Section 8:

Members shall not knowingly disseminate false or misleading information and shall act promptly to correct erroneous communications for which he or she is responsible, or which has originated from or resides on his or her system.

This section of the Code is interpreted to include messages in which an attempt is made to disguise the commercial nature of the message, those which are fraudulent, those which misrepresent the origination of the sender, and those which are violations of the law at the point of origination.

Nothing within the Code, the Bylaws of the Association, its mission statement or the will of its members specifically prohibits or discourages the legitimate commercial uses of electronic mail or messaging.

 

The Problems Of DEM

Though abuse of the UseNet messaging system on the Internet is both rampant and detrimental, the current controversy over electronic communication more frequently centers on Direct Electronic Marketing (DEM). DEM is a problem for the Internet, for five reasons:

• It is inefficient. Presently, with no controls or costs attached to DEM, it is as cost-effective to drop one million pieces of DEM on a server as one hundred. This creates a disincentive for the marketer to research, focus or target the list of recipients to insure there in interest in the products or services presented.

Similarly, there is no production cost involved in its creation or distribution. No brochures, artwork, printing or other mechanical costs. This also encourages mass mailings to an unqualified list of recipients.

• It disrupts service. A major mechanical drawback with DEM is that it arrives on the Internet without notice. It slows service for other users, often during peak use hours. In some cases, it has caused wholesale failures in the Internet networks. This disruption is frequently aggravated by the fraudulent use of incorrect or non-existent return addresses, which causes the outraged responses of recipients to bounce across the network multiple times as the system attempts to deliver messages that cannot be delivered.

• It is frequently fraudulent. The nature of the Internet is to protect anonymity. Unfortunately, this creates an environment in which unscrupulous purveyors of DEM can operate. Since the response mechanism is an electronic mailbox, there is no incentive to provide information (business name, physical address, telephone and fax numbers) that would provide consumers with greater safety or the ability to assess the validity of the company. This, in turn, also causes consumers to be wary of legitimate marketers. By many estimates, as much as 90 percent of the DEM currently sent online is fraudulent.

• It provides no value to the community. In the offline world, direct marketing subsidizes the US Postal Service, providing a direct benefit to consumers. It allows for convenient shopping, entertainment value, and a source of information valued by many consumers. This is not the case with DEM, which has no inherent value to the community at large.

• There is no effective "opt out" procedure. In the offline world, marketers operate a system that enables consumers to easily remove themselves from direct marketing lists. While the system is not completely effective, it does exist. In the online world, no such system exists – though there have been numerous efforts to create one.

• There is no compensation for service. Current DEM benefits only the originator of the message, while service providers must provide the brunt of the resources necessary to make the DEM work. Realistically, a mechanism that shares the economic benefits of DEM will more closely mirror the offline world, and will produce stronger efficiencies in the way DEM is handled on the networks.

 

The Current Controversies

In the past year, significant progress has been made toward understanding and dealing with the problems associated with DEM. Sanford Wallace, self-proclaimed "king" of the DEM business, has retired. Major Internet providers such as Earthlink Networks and Microsoft have won court cases brought against perpetrators of unwanted DEM.

Yet the current situation remains as confusing as ever. Lines of demarcation have been clearly drawn, with the sides roughly as follow:

• On one side are individual consumers who do not wish to have their time wasted by having to open and read the first few lines of messages in which they have no interest. The consumers who fall into this group are supported by an array of individual rights and privacy organizations, as well as by those whose loyalty to the old Internet culture of non-commercialism eschews any commercial messaging.

• On the other side are the marketers, who believe that they have a clear Constitutional right to communicate with their customers. They are supported by customers who wish to have product and service information, as well as by the wide array of marketing organizations who have fought for similar rights in other venues such as use of postal mail.

• Straddling the line are the individual service providers, who fall into both of the previous groups or are waiting to see a resolution to the problem. These are the online and Internet services that suffer both the wear on their systems from dumping of DEM messages, and the wrath of the subscribers who believe they should not receive this mail. These service providers are looking for additional sources of revenue that will help them to keep costs competitive while growing their business, but fear the damage to the network and other consequences of participating in DEM.

While the two camps and the companies and individuals stuck in the middle have generated significant public dialogue, lawsuits, hacking attacks on systems and servers and other assorted forms of mayhem, attempts to deal with the very real and escalating problems of DEM have been only partially successful – generally only in cases where the originator of the DEM can be identified.

Initiatives that have proven unsuccessful include:

• Efforts to claim ownership of the electronic mailbox. Unlike the offline world, where the US Postal Service rather than the consumer owns the mail box, the online industry assumes that each individual owns his or her email box. Such ownership has not been legally established.

• "Right to privacy" claims. There is a perceived right of consumers to not have to view anything they elect not to view. There appears to be little legal foundation on which to base such a right.

• Extension of laws prohibiting marketing via facsimile. The laws that were used to prohibit direct marketing via fax automatically are sometimes believed to extend to electronic mail. This concept overlooks some very fundamental differences in the two systems, not the least of which that fax machines use expensive resources and electronic mail does not. Efforts to build a case based on time wasted to read email have largely been countered by advances in preview technology for the messages and the move to flat-rate rather than per-minute pricing for Internet and online services.

What have been effective in combating the uncontrolled growth of DEM are three initiatives:

• Recognition by the courts that DEM as presently practiced creates a strong adverse impact on the Internet. Specifically, the channeling of hundreds of thousands or millions of pieces of electronic mail through an Internet system at a single time will significantly degrade the performance of the network, interfering with other forms of Internet access and communications.

• Extension of regulations and legislation related to fraud to DEM. It is estimated that as much as 90 percent of the information carried by DEM is either inaccurate or fraudulent. Efforts in Georgia and Washington State, as well as in other states and in legislation passed by the US Senate in 1998, attempt to address this issue by reinforcing penalties for fraud committed in this manner.

• The growth of filtering technology for electronic mail. While still crude and relatively ineffective for the larger body of electronic messages, filtering technology is taking the first steps toward empowering consumers to automatically reject unwanted solicitations

 

 

A Framework For Control of DEM

Though efforts to control DEM to date have been only moderately successful, there is an emerging sense of the framework that could address its inherent problems. This is only a preliminary framework, and additional time and consideration will be required to make it work. But it appears from the experiences of the online industry to date that the following will be factors in the control of DEM:

• Though not specifically tested to date, even unsolicited commercial messages are likely to be considered constitutionally protected speech. Therefore, it will likely not be possible to merely legislate or regulate DEM out of existence.

• Efforts to delineate DEM based on the content of the messages is impractical. For example, even the most liberal definitions of "commercial" email would prevent announcement to parents of what an elementary school is serving for lunch, since this would clearly be advertisement of a product for sale.

• Use of a "pre-existing relationship" test may not be sufficient. It is been assumed by many in the online community that such a test may be implemented in the near future. Under such a test, electronic mailings would be permitted to customers and other groups with whom the mailer has a "pre-existing relationship." This assumption, however, has led to the wholesale collection of personal information by virtually every business that has a web site or uses electronic mail as a hedge to show such a relationship. The rampant collection of data in order to prove the relationship has created another crisis in the area of privacy, as recently noted by the Federal Trade Commission in its survey of 1,400 web sites.

• The first step is to eliminate fraudulent mailings. The most critical elements of a framework for control of DEM will be unsuccessful if unscrupulous operators are able to flaunt the rules with impunity. As a minimal step, electronic mailers should be required to divulge their real identities and return addresses, as well as compliance with other consumer protections laws as appropriate.

• The solution must include relief for stress on the networks. Setting aside the irritation of consumers, there is very real damage done to the Internet by DEM, and elimination of this damage must be a central consideration in any resolution to DEM. At the minimum, there should be a requirement for contractual notification of the Internet service or provider prior to transmission of DEM. And it is not impractical to assume that some form of financial settlements will be required to compensate all carriers of the message traffic.

• The right of the states to impose more stringent consumer protections should be preserved. State and local laws have provided some of the strongest protections against abusive DEM to date, in part because they have more extensive protections available against business interference and detrimental business practices. The framework for the future should include some assurance that state and local considerations on behalf of Internet services and consumers not be pre-empted.

• An "opt-in" solution, no matter how desirable, may be impractical. Much of the discussion of consumer rights to date has focused on whether DEM should be sent only to those who have specifically requested communications – an "opt-in only" solution. This, however, would place severe limits on the ability to communicate with other persons without having advance written consent – taken to the extreme, this would likely be ruled unconstitutional.

• An "opt-out" solution needs strong enforcement mechanisms. The other alternative, to offer consumers a means to quickly and easily "opt out" of receiving mailings, will only work if there is sufficient disincentive ignore the opt-out list. And that such a list is well-maintained, well-promoted and easily used by consumers.

• Use of mandatory "header" information is counter-productive. Many suggestions have been made regarding an identifying mark or phrase that could be placed in the subject line or at the head of any commercial message – thus allowing e-mail filters to more easily identify and eliminate DEM. While this idea is appealing, it suffers from the definitional problems noted previously (e.g., elimination of school lunch menus) because filtering systems cannot differentiate. Attempting to have any body, organization or regulation define exceptions to the rule would be unwieldy. And use of extensive identifying information in the first lines of the message would render useless the preview screen technology used by many consumers to rapidly screen messages and their content.