Some popular free Web services are playing both sides of the fence when it comes to protecting consumers from pesky marketers, offering to block junk e-mail while they help advertisers push promotions into customers' in-boxes.
The practice underscores a delicate balancing act for e-mail services, some of which tout features for filtering unwanted messages while they cozy up to advertisers with "opt in" e-mail programs--for a fee.
Those deals fall short of supporting the most reviled form of online marketing messages: unrequested bulk e-mail known as spam. But anti-spam advocates say Web services that offer opt-in mailing lists are walking into a marketing gray area--one that could grow increasingly murky as the practice becomes more popular.
In this battle, analysts predict that spam filters, ostensibly aimed at protecting consumers from junk e-mail, will increasingly play a role in turning promotions into profits for Web e-mail providers.
"The hypocrisy is that these companies want to stop junk e-mail from other parties but at the same time want to exploit their own customers to the greatest extent possible," said anti-spam advocate Jason Catlett, of Junkbusters. "Consumers need to realize that there is no such thing as a free lunch."
CNET Networks, the publisher of News.com, offers numerous opt-in newsletter services.
Opt-in programs have been in place for some time, and analysts predict they will become more pervasive in the coming months as free Web services search for new revenue streams.
In a study released Wednesday, New York-based Jupiter Research, a division of Jupiter Media Metrix, predicted that Web e-mail providers and Internet service providers will increasingly use their power to weed out unwanted messages from consumer e-mail in-boxes as a way to squeeze profits out of direct e-mail marketers.
Since Web e-mail services already restrict access to a member's primary in-box, advertisers looking to reach consumers online will be forced to pay a premium to avoid getting dumped in the trash, according to Jupiter analyst Christopher Todd.
"Consumers are going to complain about the increased spam, so that's why we'll see a shift from the primary in-box to the bulk e-mail box," he said.
Online portal Yahoo, for example, gives e-mail subscribers the opportunity to filter bulk e-mail, directing certain messages to a junk e-mail folder rather than to the main in-box. Jupiter projects that such services will get modified so members can select topics they wish to hear about, allowing related bulk messages into their primary in-boxes.
The hitch is that marketers will have to pay to be on the select list. Advertisers could shell out an even higher premium to reach consumers based on the time they read their e-mail, according to Jupiter.
Yahoo said it is has been taking advantage of its relationship with marketers and e-mail subscribers for two years, since shortly after its acquisition of permission-based marketing company Yoyodyne. "We've recognized the value of online direct marketing for quite a while," said Nicki Dugan, a Yahoo spokeswoman.
Since some people may request marketing notices that appeal to their interests, the company sees no problem with the practice.
The online portal asks consumers when they sign up for an e-mail account if they would like to receive promotions based on their preferences. If the consumer opts in, it will charge marketers to reach these consumers via e-mail.
Microsoft's Hotmail also offers a primitive form of this type of paid marketing through its Web courier e-mail service. Newsletter publishers pay to be on a list that consumers can choose from to receive content via e-mail. The publisher then sells advertising on the e-mail newsletters to recoup losses on delivery.
Junkbusters' Catlett said opt-in programs that gain genuine permission from consumers to send material are kosher and raise no concerns of double-dealing. But he cautioned that not all opt-in programs are alike, with some aimed at duping consumers into accepting marketing material from random, third-party sources, rather than from highly targeted businesses.
"There is a gray area where companies pretend to have permission from the consumer but where the consumer...is really not aware of what they're signing up for," he said. "I call it 'creeping permission.' It's very common."
Because promotional e-mail has proliferated on the Web, the opportunity to turn e-mail addresses into profits may be too tempting to pass up, analysts said. The number of marketing e-mail messages sent through Internet service providers and e-mail services will be about 5.6 billion for every 1 million subscribers by 2005, Jupiter found.
"Internet e-mail service providers control a crucial chokepoint between marketers and the millions of consumers they want to reach," Jupiter's Todd said.
The Arizona Corporation Commission (ACC) at a recent meeting said that it disapproves of Qwest's plan to share proprietary customer data with third parties for marketing purposes unless the customer specifically asks that data not be shared.
The commission also said that it would open a rulemaking process to decide whether to forbid Qwest from implementing the policy in Arizona, though it has not ruled out taking the telco to court.
ACC spokeswoman Heather Murphy said that the commission is concerned about the kind of personal data that a "regulated public utility wishes to share among their subsidiaries, the vagueness with which customers were notified" and the fact that the program is opt-out rather than opt-in.
"Opt-in" would require the company to ask for customer permission before dispensing data.
While public policy groups like the Electronic Privacy Information Center (EPIC) have sounded off about Qwest's decision, it also has attracted the wrath of 39 state attorneys general and Sen. Paul Wellstone, D-Minn., who also said that the notifications' wording is unclear.
"I do not believe that most Qwest customers can be expected to have read thoroughly and understood that notice," Wellstone said. "I believe therefore that a mere failure by individual customers to notify Qwest that they do not want information shared cannot in any meaningful way be construed as actually providing consent to allow the information to be shared."
Qwest, the telecommunications giant that serves 14 Western and Midwest states, including Minnesota, explains its opt-out procedure in a legal notice posted on its Web site. Qwest also provided an explanation of its opt-out policy in a pamphlet sent to customers in a recent monthly bill.
Qwest said in its notice that it does not release customer account data to unaffiliated third parties without customer permission "unless we have a business relationship with those companies where the disclosure is appropriate."
The FCC is trying to decide whether to reinstate the opt-in requirement, which was invalidated by the 10th U.S. Circuit Court of Appeals in Denver in 1999 on an appeal by US West, the telco that merged with Qwest in 2000. The court decided that the FCC's opt-in privacy provision violated phone companies' First Amendment rights to market their products to consumers.
Qwest officials were not immediately available for comment.
Newsbytes.com Staff Writer Dick Kelsey contributed to this report.
Reported by Newsbytes.com, http://www.newsbytes.com .
Reposted 16:35 CST