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Small Business

A Spam Law That Slams Small Business

By Christopher Kenton

The result? We generated a flood of qualified leads, the requisite number of customers, and not a single accusation of peddling spam. Every recipient of our campaign received only a single e-mail, with a respectful message of direct relevance to their professional responsibilities, and clear contact information for addressing questions and complaints or requesting removal from the list. This is a critical point of distinction. In order for this type of campaign to work, the company has to target a very small, well-defined segment where word of mouth is a powerful force. If a company sends a message that is irrelevant or offensive, it will kill their own potential faster than they can win a customer.

Compare this to the methods used by spammers. They're selling commodity products to commodity customers. They don't care about offending thousands of customers, because a million more are right behind them. Their favorite methods include the use of software to "harvest" e-mail addresses posted on the Internet, algorithms to generate every conceivable permutation of e-mail addresses for a known domain, and applications that allow them to hide their identity and prevent you from tracking them down. The goal is to eliminate any human labor or thought while generating the largest number of e-mail hits. The result is a constant flood of duplicate, offensive, and irrelevant e-mail, providing you no recourse to stop the tide.

WRONG TARGET. The bill that has just been signed into law in California, and the legislator who sponsored it, makes no distinction between these practices or their outcome. Any unsolicited e-mail is considered spam, and the sender can be hauled into court and fined $1000 for each one sent. While that's a joke to offshore spammers who send millions of offensive e-mails a day with impunity, it's a very scary prospect for a small business, even when their campaigns include only a few thousand e-mails.

When I asked Sen. Murray, the bill's sponsor, about this lack of distinction, and how it might hurt small businesses trying to generate leads, his response was astonishing. "The only legitimate presales process is to have a business relationship with the recipient or to have had them request information." He is also quoted in a recent New York Times article as saying, "If you go out and rent a list of e-mail addresses, by definition you are not a legitimate business."

I guess startups -- which by definition have no previous business relationship with customers -- are less legitimate than, say, banks, that have thousands of previous business relationships. Tell that to all of the successful technology businesses in Silicon Valley that built themselves up by using targeted, effective marketing -- without resorting to the kinds of tactics that have offended the public. In the interest of stemming a very serious, and very public problem, our legislators are responding with ham-fisted laws that do nothing to solve the problem and hurt small businesses in the process. So what can we expect as a result?

RIGHTEOUS IGNORANCE. Small businesses will pull back from e-mail marketing, eliminating perhaps the one respectful, relevant e-mail out of every 1,000 pornographic or offensive e-mails you receive. Their marketing costs will go up dramatically, as they have to pursue more expensive and less responsive marketing channels. Large businesses will benefit, because their large customer base conveniently falls into a category that allows them to send unsolicited e-mails -- that of the existing business relationship. These large businesses will also benefit as their business partners pay them to send unsolicited e-mails to their customers on their behalf. Meanwhile, you'll still be getting more spam tomorrow than you're getting today.

What makes this situation so astounding is that this legislation is appearing in a state with the worst financial crisis in history. The future of our state depends on the same economic engine that generated the last boom -- small, fast-growing businesses. But the speed with which small businesses grow depends on their ability to identify and reach prospective customers as effectively and cheaply as possible. California has just taken one of the most effective tools away from small businesses, while doing nothing to solve the problem of spam. Of course, they can still claim a political victory since so few voters will understand the difference. What kills me is that they don't seem to understand the difference either.

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