What do these two states have in common?
Well, in the world of email, both recently enacted laws attempting to protect children from inappropriate email (see http://www.clickz.com/news/article.php/3516736). Simply put, marketers of certain goods, such as alcohol, gambling, automobiles, etc, cannot send emails to state-maintained registries of children.
While I applaud the effort to protect children, there's a problem. These laws, designed by people who don't understand direct marketing, risk creating massive headaches for legitimate marketers. Ironically, the laws will be completely ignored by the bad emailers they seek to block. And, if other states decide to follow suit, the costs and efforts of legitimate, permission email marketing could go up, maybe a lot.
Let's look at how these laws work. While it would be easy if states just shared the "do-not-email" (DNE) list with marketers, the risk of these lists being abused by criminal spammers is just too high. Therefore, the states are requiring that marketers UPLOAD their house lists to state-run systems, which will then check the lists and send back the names that should be removed. Marketers will need to check their house lists against the states' DNE list at least every 30 days. The states will charge between $7 and $30 CPM for EACH NAME SUBMITTED for scrubbing.
This sounds simple enough. What could go wrong? A lot.
For instance, if you market automobiles to a list of 1 million names, and don't have reliable data on home state, you could be paying $120,000 per year (12 scrubs of 1MM names at $10 CPM) just to avoid breaking the laws in those states. If another 10 states adopt similar laws, email marketers could face over $1 per name per year just to scrub a tiny handful of children from their lists. At the very least, these states need a more realistic price for this service.
What else could go wrong? Let's say the legitimate email industry sends 2-4 billion messages a month. (I suspect the real numbers are higher but I'm using these for the sake of illustration.) And, let's say this represents 2 billion names on all the various email marketing house lists. Finally, let's take 5 percent of that number, or 100 million names, for the lists used by marketers of disallowed product categories. Using the Utah and Michigan approaches, this means their scrubbing systems will have to scrub 100 million names a month. Is anyone else wondering if these two states have prepared their data systems for this load? So, if these systems crash under the load, and a child in one of those states is inadvertently sent an email advertising beer, is the email sender still liable?
Furthermore, these laws allow for a private right-of-action. This means citizens can sue any sender they believe violated the law. The result could be that spam is no longer the most lucrative way to abuse email. All the email bad guys will move to Michigan and add their children's email to the registries. Then, they will opt-in their kids for every car, porn, beer, tobacco and gun newsletter they can find. On day 31, they'll start suing every poor marketer who hasn't been paying their hundreds of thousands of dollars a year in scrubbing fees. All of sudden, making $250,000 a year pumping out Viagra ads looks like small change to the millions in settlements you can collect from the legitimate marketers of disallowed products.
The bottom line is that protecting children is a fantastic goal, but this is the wrong way to do it. Unless these laws are overridden at the federal level or overturned in their states, it is likely that marketers of cars, alcohol, gambling and other disallowed categories will simply quit using the email medium altogether. Or, in the best case, they will find it much cheaper to simply NOT send any email to anyone in these states. My guess is that the citizens of these states will take a little while to figure this out, but I'm hopeful that a few-too-many missing newsletters will make them talk to their lawmakers about a more reasonable solution.
Let's hope that these two states will see the light and implement more realistic approaches and penalties before another 25 states' legislators jump on the bandwagon and make email marketing as complex and administratively expensive as selling insurance or transporting toxic chemicals across state lines.