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February 4, 2006

AOL and Yahoo to charge for email delivery

Posted by David Hunter at 7:46 PM ET.

Yet more evidence that no bad idea goes untested – Saul Hansell at the NY Times reports that Postage Is Due for Companies Sending E-Mail:

Companies will soon have to buy the electronic equivalent of a postage stamp if they want to be certain that their e-mail will be delivered to many of their customers.

America Online and Yahoo, two of the world’s largest providers of e-mail accounts, are about to start using a controversial system that gives preferential treatment to messages from companies that pay from 1/4 of a cent to a penny each to have them delivered. The senders must contact only people who have agreed to receive their messages, or risk being blocked entirely.

The Internet companies say that this will help them identify legitimate mail and cut down on junk e-mail, identity-theft scams and other scourges that plague users of their services. The two companies also stand to earn millions of dollars a year from the system if it is widely adopted.

AOL and Yahoo will still accept e-mail from senders who have not paid, but the paid messages will be given special treatment. On AOL, for example, they will go straight to users’ main mailboxes, and will not have to pass the gantlet of spam filters that could divert them to a special bulk e-mail box or strip them of images and Web links.

And there’s the bottom line, “Pay up or our high tech spam filter may trash your mail.” Nothing like the old value add.

Implementation would be via technology from privately held Goodmail Systems and is explained here. I like step 8. “Non-certified email may be sent to the trash, user’s junk folder or inbox – delivery to the inbox is NOT guaranteed.” Goodmail’s VC backers must be ecstatic – it seems to be a legal form of the protection racket.

Goodmail was founded several years ago with the idea that it would charge postage for all mail, but it has narrowed its focus to mail sent by companies and major nonprofit organizations, which will pay a reduced rate. It does not envision that individuals will pay to have their e-mail delivered.

Nice of them, but it’s hard to see how that squares with “delivery to the inbox is NOT guaranteed.” As far as Microsoft goes:

… CoolSavings already works with Bonded Sender, a company used by Microsoft’s Hotmail service and other providers to identify sources of legitimate mail. Bonded Sender charges a flat fee of no more than $20,000 a year to the highest-volume senders, a fraction of what they would pay through the Goodmail system. Mr. Moog said that the Goodmail system would at least double the cost of an e-mail campaign. “I don’t think the economics work,” he added.

Matt Blumberg, the chief executive of Return Path, the New York company that runs Bonded Sender, said there was no need for the Goodmail price to be so high.

“From AOL’s perspective, this is an opportunity to earn a significant amount of money from the sale of stamps,” he said. “But it’s bad for the industry and bad for consumers. A lot of e-mailers won’t be able to afford it.”

It’s sure going to be a treat on a technical basis for small businesses. More by following the link including a brief discussion of what currently seems to be a widespread treasure hunt for internet tollbooth business ideas. The common denominator is avoiding consumer wrath from direct charges by putting the squeeze on content providers.

Filed under AOL, Coopetition, Hotmail, MSN, Yahoo

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One Response to “AOL and Yahoo to charge for email delivery”

  1. Says:

    [...] Cory says the system “will undermine the ability of activist groups like MoveOn and others to correspond with their supporters”. I doubt that very much – the treatment of existing email will not be changed. And Nicholas Carr follows up on the net neutrality theme raised in the NYT article – maybe, but that’s for another day. And Microsoft News Tracker says of the underlying service, provided by Goodmail, “Non-certified email may be sent to the trash, user’s junk folder or inbox – delivery to the inbox is NOT guaranteed.” Trash??? [...]

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