Daily Archives: August 23, 2006

Stock spamming works

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Sophos, a Massachusetts-based supplier of software for protecting companies and consumers from online threats, reported in July that 15 percent of all junk e-mail messages are now stock spam, up dramatically from less than 1 percent 18 months ago. Here’s a Technology Revew piece about some interesting research conducted by Jonathan Zittrain and a colleague. Excerpt:

Stock spam uses the classic “pump-and-dump” scheme. A spammer sends out a mass e-mail message touting a penny stock with low trading volume in hopes of convincing a handful of people to buy shares of it. If the spammer succeeds, the limited buying activity boosts the stock’s price and liquidity just long enough for the spammer to sell his own shares (or the shares of his client) at a profit. The stock subsequently plunges and those who bought it are usually hit with a loss.

In their study, Zittrain and co-author Laura Frieder, an assistant professor of finance at Purdue University in Indiana, sought to quantify the effectiveness of such campaigns. To do so, they analyzed more than 75,000 stock “touts” appearing in Zittrain’s e-mail inbox and a Usenet spam-sighting newsgroup between January 2004 and July 2005. The date and estimated size of each spam campaign was compared with the price and trading volume of the company shares being promoted over several days, including the day immediately preceding the campaign.

The researchers discovered that if a spammer bought a stock a day before beginning heavy touting, then sold the morning after the first day of touting, the average return on investment was 4.9 percent. And more effective spammers saw a 6 percent return.

On the other hand, if a victim were to invest $1,000 in a stock on the day of heaviest touting, that investment would be worth, on average, $947.50 in the two days following the spamming campaign. For the most heavily touted stocks, the same investment would fall by 7 percent, to $930. The study also confirmed that the volume of touted stocks responded “positively and significantly” to touting campaigns, meaning that trading activity increased.

“Our analysis shows that [stock] spam works,” wrote Zittrain and Frieder. “Among its millions of recipients are not only those who read it, but who also act upon it, suggesting a value to spamming that will create a powerful counterbalance to regulatory and technical efforts to contain it.”

UK bans Segway

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The Times reports that:

The Government has declared that the Segway Human Transporter — a £3,000 self-balancing scooter — cannot be used in any public place. […]
In Britain the Department for Transport has welcomed the scooter with a double- whammy, invoking the Highway Act of 1835 to ban it from pavements and EU vehicle certification rules to keep it off roads.

In a document, Regulations for self-balancing scooters, the department says: “You can only ride an unregistered selfbalancing scooter on land which is private property and with the landowner’s permission.” It rejects proposals that the Segway should be treated like the faster electric bicycle.

It says: “A self-balancing scooter does not meet requirements [for electric bicycles] as it cannot be pedalled.”

So that’s that, then.

Quote of the day

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“Why — in the age of the Internet — [does] the FBI [restrict] itself to a dead-tree source with a considerable time lag between death and publication, with limited utility for the FBI’s purpose, and with entries restricted to a small fraction of even the ‘prominent and noteworthy’? Why, in short, doesn’t the FBI just Google the two names? Surely, in the Internet age, a ‘reasonable alternative’ for finding out whether a prominent person is dead is to use Google (or any other search engine) to find a report of that person’s death. Moreover, while finding a death notice for the second speaker — the informant — may be harder (assuming that he was not prominent), Googling also provides ready access to hundreds of websites collecting obituaries from all over the country, any one of which might resolve that speaker’s status as well.”

D.C. Circuit Judge Merrick B. Garland introducing the FBI to a wonderful new investigative tool.

The judge was deciding a case involving four audiotapes recorded more than twenty-five years ago during an FBI corruption investigation in Louisiana. The plaintiff, an author, had sought release of the tapes under the Freedom of Information Act . There are two speakers on the tapes, one a “prominent individual” who was a subject of the FBI’s investigation, and the other an “undercover informant” in that investigation. The nub of the appeal was whether the FBI had undertaken reasonable steps to determine whether the speakers are now dead, in which event the privacy interests weighing against release would be diminished.

The FBI claimed that it had not been able to determine whether either speaker is dead or alive. It said further that it could not determine whether the speakers were over 100 years old (and thus presumed dead under FBI practice), because neither mentioned his birth date during the conversations that were surreptitiously recorded. It said that it could not determine whether the speakers were dead by referring to a Social Security database, because neither announced his social security number during the conversations. And it declined to search its own files for the speakers’ birth dates or social security numbers, because that is not its practice. “The Bureau”, said the judge acidly, “does not appear to have contemplated other ways of determining whether the speakers are dead, such as Googling them.”

And in a footnote, he helpfully points to the OED definition of “googling”.

Thanks to GMSV for the link.

YouTube’s business plan emerges from mist

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Acute observations from Good Morning Silicon Valley.

This morning YouTube lit up its “Paris Hilton Channel,” a collection of videos, interviews and other detritus offered in promotion of “Paris,” Hilton’s first effort as a recording artist — and along with it an ad for Fox’s TV show “Prison Break,” revenue from which will presumably underwrite some of the site’s bandwidth costs. “So will Paris Hilton and other stars counteract YouTube’s ludicrous bandwidth expenses,” asks Mashable’s Pete Cashmore. “I actually think they might — despite all the anti-hype around YouTube and the recurring question ‘Where’s the Business Model,’ I think it’s pretty clear that YouTube is a powerful branding platform — and not just for stars like Paris Hilton. MySpace has totally changed the nature of advertising — users now make friends with brands (see MySpace Marketing and Dasani’s custom MySpace layouts), and advertising is no longer about pushing content to people when they don’t want it. The Paris Hilton channel is just the start, and I expect to see hundreds more of these things springing up — why shouldn’t every media company have their own YouTube channel and MySpace page?”

Planned pay-for-placement channels are just one part of YouTube’s new advertising strategy. The video-sharing site has begun displaying commercials on its homepage as well. Interestingly, the site treats these ads just like any other video it hosts — allowing users to rate them, comment on them, or even embed them in their own Web sites. “These days, consumers are like walking TiVos, filtering out so much of what they see and hear in advertising,” said Mark Kingdon, chief executive of digital ad agency Organic, which produced the “Prison Break” spots appearing on the Paris Hilton Channel. “To reach this media-savvy demographic, advertisers have to ‘give to get.’ In other words, they have to give viewers something special, something unique, in exchange for their attention.”

Later… More useful reporting on TechCrunch.