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Clearing way for legitimate e-mail?

Marketers hope anitspam law restores industry's reputation

WASHINGTON -- Gail Goodman doesn't sell penis enlargers. She doesn't pitch get-rich-quick schemes involving deposed Nigerian dictators. No cheap loans, no dream homes, no herbal Viagra.

The Waltham company Goodman heads, Roving Software Inc., sends e-mail promotions and newsletters on behalf of customers like Berklee College of Music and Salumeria Italiana, a specialty food store in Boston's North End. Goodman says the company sends e-mail only to people who have requested it and offers simple unsubscribe instructions in each message.

But computer users choking on a steady diet of salacious and unwanted spam e-mail sometimes have trouble telling the difference.

So do the antispam software programs consumers and corporations use to filter junk e-mail from welcomed messages, such as those sent through mailing lists administered by Roving.

Spam "has dramatically impacted our business," said Goodman, Roving's chief executive.

As President Bush prepares to sign antispam legislation into the nation's first law restricting commercial bulk e-mail, the focus has been on how consumers might benefit.

But legitimate e-mail marketing businesses like the Boston-area's IMN Inc., e-Dialog Inc., and Roving hope the bill's tough penalties will clear out some of the junk e-mail and help restore the industry's tarnished reputation.

The legislation "allows business and commerce to still occur, but it sets standards for how e-mail will be used," said Peter Mesnik, cofounder and chief technology officer of IMN, the Newton company founded in 1999 as iMakeNews.

Marketers once saw e-mail as the wave of the future. It's much cheaper, faster to deliver, and easier to measure the effectiveness of than print mailings. It's also less expensive than telemarketing, and less likely to reach angry consumers during dinner.

"The economics appear to be irresistible," said Charles H. Kennedy, a partner with Morrison & Foerster and adjunct law professor at the Catholic University of America.

But the sharp rise in the amount of spam, to more than half of all e-mail traffic today from 7 percent in 2001, has made computer users quick to delete anything they perceive as unwanted -- or to report it to their Internet service providers as spam.

Those service providers have increased their use of spam-filtering software, which sometimes snares bulk e-mail that users requested by subscribing to mailing lists or consenting during an

online purchase to receive messages.E-Dialog, based in Lexington, dedicates 6 percent of its payroll to workers simply trying to ensure that mailings reach the desired customers and comply with the industry's code of conduct, as set by the Email Service Provider Coalition.

The understandable outcry against spam has overshadowed how e-mail can help businesses reach their customers, said John Rizzi, CEO of e-Dialog.

"Small businesses are not perpetrators of spam, they are victims," he testified before the US House Committee on Small Business here in October.

In the face of so much spam, many businesses say they have largely abandoned e-mail as a way to find new customers on the Internet. They are instead sending promotions and newsletters to existing customers in an effort to keep them coming back.

"Marketers have to completely rethink and understand e-mail as a medium," Mesnik said.

The industry argued against federal legislation, until states began passing laws trying to restrict unsolicited commercial e-mail. The toughest, scheduled to take effect in California on Jan. 1, prompted e-mail marketers to begin lobbying hard for a federal law to override the 37 state rules.

Unlike the California law, which prohibits sending commercial e-mail to anyone who has not requested it, the federal legislation allows a business to send e-mail until the recipient asks it to stop. Marketers are required to label e-mailing containing advertisements, to not mask their identity in the reply address, and to include an "unsubscribe" Internet link in each e-mail.

Despite the e-mail marketing industry's lobbying, the law includes a provision asking the Federal Trade Commission to explore creating a Do-Not-Spam list of e-mail addresses.

The industry won another battle, however, by killing a provision that would have allowed individual consumers to sue spammers.

"The fear was that we would take every consumer frustrated with the spam in their inboxes and turn them into vigilantes," Goodman said.

The Senate passed the Can Spam Act of 2003 in a voice vote last week and sent it with minor wording changes to the House, which had approved an earlier version 392-5. President Bush has indicated he would sign it.

The law is expected to take effect Jan. 1 -- if courts don't strike it down as an unlawful ban on speech. Similar laws banning junk faxes have withstood legal challenges, but lawsuits fighting the recently created Do-Not-Call list have not yet been resolved.

Many people are skeptical that the law, even if upheld in court, will help solve the spam scourge.

Although some consumer groups want to banish all commercial e-mail, messages from large, established corporations are not the problem, said Jeffrey H. Matsuura, director of the law and Internet program at the University of Dayton.

Ninety percent of spam is believed to come from about 200 junk e-mailers, with many distributing billions of messages a day from computers located overseas to avoid prosecution.

"Most large businesses are really mindful of the negative potential of spam," he said. "I think they're going to continue to operate on their own best business judgment."

Chris Gaither can be reached at gaither@globe.com.

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