David H. Reilley, Jr. (Google Inc, formerly Yahoo!) and Justin M. Rao (Microsoft Research, formerly Yahoo!), have authored a paper on the Economics of Spam. It does a decent job of dissecting how and why spam “works”, and how various legislative initiatives such as the CAN-SPAM act in the US have had relatively little impact – that is, they haven’t helped reduce spam or make it less of a problem.

The full manuscript is available in PDF.

Spam is (overall) profitable for those who engage in it, even though the spam methods tend to be illegal. The things that are sold and the means of selling tend to be illegal anyway, so advertising in an illegal manner doesn’t really stretch their ethics or risk.

But more importantly, the authors estimate that society loses $100 for every $1 of profit to a spammer. This once again proves that not all economic activity is good. Regardless of profit, when the cost to society is that large, I would think it wise to not even get close to being involved with it in my business.

Many people don’t even realise that when they (for instance) purchase a list of email addresses they are likely breaking some local laws, and they may even make some money from it, but I think it’s just not right. If they, once informed, persist in using such marketing means, they lose all credibility with me. Unfortunately, many businesses to engage in spamming activities. Just choose to don’t be one of them.