No one likes spam.
Thanks to Thomas Hawk for this photo!
Email lists are a key asset in a website purchase. As Chris detailed in last week’s post on what makes an email list valuable, an engaged email list can be a powerful driver for revenue. These lists may be made up of a list of subscribers, registered users, former customers, or potential customers, for example. Buying a website that comes with such an email contact list however, involves special considerations.
On Flippa, email lists can only be sold along with the website for which the list was compiled. You might see other sites offer standalone email lists for purchase. In general, these lists don’t perform as well as an opt-in list collected from your site’s users. Here is how you should evaluate an email list as part of a website purchase.
1. Who Created the List?
Ideally, you would only purchase an email list from someone who can demonstrate that they created the list themselves, or can at least show a chain of ownership from the creator of the list to themselves. This is a key consideration because just like buying a home or used car, you need to be sure that the seller is really the owner of the data. If the seller can show you that the email list was compiled from his website’s registered users, or from people who opted-in to his newsletter, for example, that can be a good indication that the seller has valid title to the data, and is not trying to sell something that really is not his to sell.
2. How Was the List Compiled?
Knowing how the list of contacts was compiled is just as important as knowing who created it. There are several reasons for this. The first and more obvious reason is that the quality of the list is largely dependent on how it was created. If it was created as a result of people specifically asking to be included in the list, then it will usually be of much greater quality than a list that is compiled by scraping random data from around the web.
But more importantly, whether someone on the list voluntarily opted-in or has a pre-existing business or customer relationship with the sender, for example, can affect whether you can legally use the list. Some countries have enacted laws which regulate the use and transmission of such email lists, when they are considered “spam”. For example, Wikipedia has a list of various countries and their respective anti-spam legislation. Accordingly, where you and the people on the list are located can affect the rules under which the list can or cannot be used.
3. What Rights Are You Buying?
Buying an email list can mean various things. It can mean that you are buying a copy of a list that the seller can still use himself, and can even sell over and over again to other people. Or it can mean that you are buying the exclusive rights to the list, so that no one except you can use it or sell it. Accordingly, when buying a website that includes an email list, you should agree upon the type of rights that you are purchasing. If you are buying an “exclusive” right, i.e. the seller cannot use or sell the list ever again after the transaction, that should be specifically spelled out, and arrangements should also be made for the seller to transfer the original database and destroy all copies.
4. How is the List Identified?
If the website comes with an email list, how is the list identified so that you know exactly what you are getting? Often prudent sellers will want to review all or part of such lists so as to verify accuracy of the list. But in addition to that, you should determine the exact number of people on the list, and what data is included so that there are no surprises. Does the list include the users’ name, location, purchase history, or any other identifying information? Ideally, the buyer will have a chance to see the list to evaluate its quality before the sale is finalised. When this isn’t possible, the buyer may want to see a sample of the list.
5. Has the List Been Compiled in Accordance With Applicable Privacy Legislation?
Some countries, such as Australia and Canada, have passed specific laws about how personal information is to be collected and kept. For example, Australia has a Privacy Act, and Canada has the Personal Information Protection and Electronic Documents Act. Wikipedia has a summary of various personal information privacy laws. When purchasing an email list as part of a website purchase, you should consider whether the list was compiled in accordance with any such applicable legislation, and whether you are able and prepared to adhere to such legislation once you become the owner of the data.
What About You?
I know some of our readers have bought standalone email lists in the past. Have these performed well for you? Have you ever been hit with a penalty for buying a list, either in lower deliverability rates or with a fine for spam?