www.investors.com Printer-Ready Version

Article Title: "Spam-Blocking Firms Look To Clean Up E-Mail Delivery "
Author: MIKE ANGELL  Section: Internet & Technology		Date: 7/11/2002
Bigger investment returns! Lower mortgage rates! Work from home! A better love life! With promises like this, what's not to like about unsolicited e-mail, better known as spam? Well, there's plenty not to like if you must wade through one junk e-mail after another. It takes up valuable space on e-mail servers, hogs up networks and wastes time. Some high-tech start-ups, though, see spam - that is, the blocking of it - as a possible gold mine. These companies are pitching a variety of techniques, such as screening all e-mail, building databases and getting marketing firms to post bonds that they could lose, to stem the flow of spam. Spam's growth is scary. Industry watchers estimate that from a fourth to a third of the 10 billion e-mail messages sent daily are spam. Brightmail, one of the spam blocker start-ups, recorded 4.6 million cases of spam among its customers just in May. That's up 400% from May 2001. "If you take a look at productivity lost, that's the main selling point for companies" that sell spam-blocking services, said Michael Osterman, who heads tech consultant Osterman Research. He says most spam blockers basically set up a "blacklist" of spam. This software looks for common keywords in spam, or addresses that send out excessively large amounts of e-mail. Those senders go on the blacklist. The main downside of the approach is that, potentially, some good e-mail is blocked. "The false positive is one problem," Osterman said. It's a problem the companies haven't overcome. Plus, there's the fact that anyone can - and everyone does - simply hit the delete key to rid themselves of e-mail they think is spam. Thus, research firm Radicati Group says the total revenue for all spam-blocking companies will reach only $88 million this year. But e-mail spam is becoming more of a headache, and Radicati sees 20% revenue growth next year. The small size of the market isn't slowing companies like Santa Clara, Calif.-based Mailshell.com Inc. For $35 a year, its users can set up unlimited e-mail accounts. Finding Fingerprints Mailshell then looks at all the messages coming into its servers. Eytan Urbas, a Mailshell vice president, says the company creates a "fingerprint" for every message sent through it. The fingerprint comes from certain keywords in the e-mail or in the addresses from which they are sent. If that fingerprint turns up too many times, it's considered spam and it's blocked. Urbas says 800,000 people have signed up for the service. "You get a money-back guarantee if we don't block 99% of spam," Urbas said. Redwood City, Calif.-based Postini Corp. also checks a customer's incoming e-mail for characteristics of spam and blocks those messages. The company goes further by trying to block spammers from even getting e-mail addresses, says Chief Executive Shinya Akamine. It monitors who gets access to a customer's servers. That's where spammers find e-mail addresses. Akamine says his focus is to provide services to overworked corporate e-mail administrators. "I don't think the market just for blocking junk mail will be very big," Akamine said. "The real market is helping e-mail administrators. They're getting bogged down trying to limit spam." San Francisco-based Brightmail Inc. has set up a network of dummy e-mail accounts, and the addresses remain private. Any message to those accounts is unsolicited. Hence it's defined as spam. Brightmail sends out an updated list of those spam messages to the e-mail servers of its customers so they can block the messages. Updates - as many as 100,000 a day - go out every five to 10 minutes. Like Anti-Virus Software "It's similar to the anti-virus world, which sends out patches and alerts," said Brightmail Chief Executive Enrique Salem. While Brightmail relies on server software and dummy e-mail accounts, San Francisco-based Cloudmark Inc. uses desktop software and real users to monitor spam. Users download Cloudmark's SpamNet to their personal computers. The software checks a person's incoming e-mail against a spam database that Cloudmark updates and sends out to users. Cloudmark Chief Executive Karl Jacob says other spam-blocking services can't keep up with the deluge. Cloudmark's system "takes the power of people on the Internet who are fed up with spam and gives them an outlet," Jacob said. San Bruno, Calif.-based IronPort Systems Inc., which makes an e-mail server, developed what might be the most low-tech, and most painful, approach. Instead of trying to block bad e-mail, IronPort sets up a "white list" for legitimate e-mail. Anybody who might send marketing or sales e-mail first posts a cash bond. Those who post a bond get through IronPort's server. But if it's determined that they sent spam, IronPort takes a fine from that bond. The bond system works alongside filtering services to assure that good e-mail gets through, says Tom Gillis, vice president of sales at IronPort. Gillis says using only a spam blacklist raises the chance that legitimate e-mail will be blocked. "You can imagine the problems if a customer tried sending an e-mail to a company and the filter blocked it," he said.