The Spammer Next Door

ISPs try to distinguish between commercial e-mailers who follow the rules and those who don't. One way spam shops are judged is by their method of gathering e-mail addresses. The shadier operations poach e-mail addresses by sending drones into chat rooms and by using the "dictionary method," which assumes, for instance, that approximately 10,000 Yahoo users can be reached by typing "Sarah" and any combination of four digits before the ampersand.

Companies like Virtumundo -- which advertises no porn, no illicit drugs and, as of 2003, no online casinos -- say they operate by a different model than the address-poachers who bounce ads for discount Valium off servers in Iran. "They are not in the business of mass-mailing unsolicited commercial messages to end users. That's just not their business," says Peter Kosmala, assistant director of the Network Advertising Initiative, an industry trade group.

Kosmala says his clients are not spammers because they have users' permission to deliver promotions and offers. "That permission is solicited, obtained and respected over time."

Of course, permission is not necessarily the same thing as desire. Every day, thousands of users agree to be spammed without knowing they've done so. Virtumundo's devil lurks in the details -- specifically, lengthy privacy agreements that might not have been read by a sweepstakes player or a racing fan signing up to receive NASCAR's e-newsletter. Click (or fail to unclick) the terms of agreement, and permission is granted.

Privacy policies serve to mollify regulators and the ISPs. (The ISPs maintain whitelists and blacklists, separating the "good" from the "bad" bulk e-mailers.) But among those who judge Internet behavior in moral rather than legal terms, the fine print carries little weight. Levine summarizes Virtumundo's 2,300-word privacy policy: "We will scrape every bit of information we can find if we think you're over 13 years old, and we'll do whatever we want with it.

"I think you can fairly say that their privacy policy is at the less desirable end," Levine adds.

The sheer number of people in Virtumundo's user base would seem to cast doubt on its collective willingness to accept advertising. At 70 million names, Virtumundo's database is larger than AOL's membership. Yet Virtumundo is a relatively obscure company. Says Drexel's Karl Barth: "I feel fairly certain that if I asked 100 of my users if they wanted mail from Virtumundo, that 100 out of those 100 would say, 'Who's that?'"

On command, Yerazunis can reach into his junk mailbox and find Virtumundo-sent ads for printer ink and life insurance. But he claims he's never given any company permission to advertise to him. How is this possible? Yerazunis offers a terse explanation: "To make it short, Virtumundo is a spam house."

"So, do you think everyone around here misses me, or are they just pretending? What's your guess?"

Scott Lynn is standing in the lobby of Virtumundo's Overland Park office, gently quizzing a receptionist. Earlier this year, Lynn restructured his company, dispatching Virtumundo to a modernist cube off College Boulevard. Though he still owns the company, Lynn is no longer Virtumundo's president and CEO. He's concentrating on a venture called Adknowledge, which aims to help Web publishers better "monetize" their user base.

Because Adknowledge is based on the Plaza, the dozen or so Virtumundo staffers who cross Lynn's path seem surprised to find him in their suburban office. He is dressed in a crisp, light-blue, button-down shirt and olive-green slacks. Lynn is tall and thin but not gangly. A pronounced nose lends bearing to a young face.

Lynn founded Virtumundo in 1998, when he was an 18-year-old University of Missouri-Kansas City student. College would not hold him for long. He had graduated early from Shawnee Mission Northwest High School, signaling that he preferred self-education.

The Internet was Lynn's passion, and he listened for opportunity's knock. He incorporated Virtumundo with money he had earned designing Web sites. When he was 15, he devised with a friend a program that would allow relative novice computers users to create their own Web pages. But the fledging business lacked funds and maturity. A few years later, Lynn saw Lycos pay $58 million for Tripod, a company with a similar product.

When Lynn started Virtumundo, the Internet economy emphasized page views. Sites rushed to attract and retain visitors. The "stickier" the Web page, the more advertisers would pay for banner space.

Lynn built his Web page around a proven appeal: the chance to win a big prize. His site, Treeloot.com, enticed users to find treasures of up to $25,000 hidden in pixels on a computer-generated tree. With more than 170,000 pixels on the tree, most "winners" settled for coupons from advertisers. (Lynn says Treeloot has given away $1 million in cash and prizes.)