Email spam is a source of aggravation for everyone.It consumes
ressources and leads to a clogging-up of the Internet. As I understand
them, the economic facts are the following:-
a) only a fraction of 1% of recipients respond; but
b) this is enough to make a sizeable income if you are able to send a
very large number,
(which appears perfecly logical).
What I don?t understand is:
1) ISP?s must be able to measure the amount of email traffic everyone generates;
2) They must also be able to distinguish between legitimate (business)
traffic and spamming traffic (if only by prior arrangement).

My question is then, are ISP?s themselves ultimately responsible for
the fact that spam exists?, through the desire to make a small profit
from the subscriptions paid?.

Most  ISPs will cancel the account of a spammer,
and actually put that (no spam, no scams, ... ) in the terms of the service.

 That's true particularly in US and EU, where  (UCE) 
 commercial mail without opt-in is illegal
http://www.cdt.org/speech/spam/030319spamreport.shtml

 It is small number of servers, many of them overseas which generate
 bulk of the spam, and many are set up for this purpose, owned by the 
spammers. 
 Here is breakdown by the country of origin and destination:
http://db.org/spam/weekly/2004/01/
 http://www.modulo.ro/antispam/node2.html
 
Why are those not disconnected? Well, there is no global authority which
would allow/disallow someone to become an ISP - it is 
just matter of skill and cost.

There are private iniciatives which keep real time databases  (RBLs) of known
spammers sending addresses (IPs) and some ISPs will block mail from these
IPs. The addresses seen by the user are usually fake, but IPs, the number
addresses hidden in the header can be used to identify sender. However,
there are problems (false positives) when an inonncent user gets blocked,
because numerical address (IP) is in a block used by spammers. And spamers
do change their IPs and methods, there are measures and counter-measures 
- an arms race of sorts.
Here and expert tells you how to escape an black hole:
http://www.clickz.com/experts/em_mkt/opt/article.php/1453661
and here is what can happen to inoncent user:
http://brian.carnell.com/articles/2002/07/000013.html

Here is one story which illustrates complexity od spam
http://www.wired.com/news/technology/0,1282,12957,00.html

In this case spammer gets a control of unsecured computer and creates
a zombie. He loads his/her software and then, on command, zombie
starts sending
spam, viruses, ... By the time zombie is identified and disconnected, spammer
erased all traces. Who is to be blamed?

Many spams are propagated by inoncents, who believe hoaxes and chain letters
http://www.internet-101.com/hoax/
Can't the government do something? May be, but many people are warry of 
government 'censoring' the internet.
http://www.computercops.biz/article3922.html

Some counties try to control inflow, not with great success
http://www.newscientist.com/news/news.jsp?id=ns99992768
but most countries have some spamcops
http://banspam.javawoman.com/report3/gen1.html

Problem can be solved, but it will take a bit more of cooperation
and caring then we have at the moment on this small planet.
One day, digital signatures will make it more dificult to keep changing
identity - be anonymous - and so misbehave with no consequences ..
http://www.youdzone.com/signature.html

In the meantime, there are method to minimise the problem:
http://www.arachnoid.com/lutusp/antispam.html
Main thing is: be careful with your address,
Think when you see: enter your address here
and have at least two, one private, one throw-away       
 .. but that is another question.

 search terms: black hole spam 
                CERT, hoax, great firewall
                 spam by origin, 

 hedgie

A very well-documented and informative survey of the question, many thanks!

Not entirely. First, quite a bit of spam comes from other countries
(Russia and China being two big names) where it's hard to contact and
even harder to communicate with administrators about spam concerns.

It's also becoming an organized crime situation. Mafia-equivalent
groups are forming and pushing spam and protecting their 'enterprises'
- it's just that profitable. ZDNet has a pretty decent article on that
at http://www.zdnet.com.au/insight/toolkit/security/systems/0,39023913,39150051,00.htm

Furthermore, ISPs can't simply block spamming computers, because a
huge number are compromized legitimate servers owned by private
admins. They are infected or hacked until they can be used as a
'zombie' server, able to be used for spam, DDOS attacks, and more.
It's even suspected that the current IE/IIS virus, Download.Ject, may
have been trying to create a spam network. Here's a page discussing
that: http://www.geek.com/news/geeknews/2004Jun/gee20040628025762.htm

Finally, there's some legal issues. Some email ads are legitimate
(opt-in), and it's hard to prove spam is just that without a great
deal of research. Shut down one legitimate user, and you have a
lawsuit on your hands.

The best defenses against spam are the easiest. Protect your email
address - don't leave it exposed on websites, and create a junk email
account, e.g. Hotmail, for anything you submit on the web.

Good spam blockers are a dime a dozen, and their are better email
clients than Outlook and Outlook Express. I recommend Thunderbird from
Mozilla (http://www.mozilla.org/projects/thunderbird/); it has a good
interface, is quick, and has integrated spam blocking.

If you must use Outlook/Outlook Express, set up some good message
rules to filter it, and you'll be in good shape. About.com has a good
tutorial at http://familyinternet.about.com/cs/email/a/aaemailhelp.htm

As you said, perhaps one percent actually respond. To truly shut down
spam, it's important to educate that one percent - then spam won't be
profitable anymore!

Thanks for your very helpful comments, Itomeshi, you've made things a
lot clearer to me and the links were particularly instructive. I just
hadn't realized that spamming was such a criminal enterprise.

Not all of it is a criminal enterprise - there are still a few major
independant spammers - but that's rapidly changing. Because of laws
like the US's CAN-SPAM act (which is quite possibly the worst named
law ever, by the way), it's becoming easier for ISPs and US officials
to work together and shut down US spammers, but it still is by no
means easy.

And the truly criminal ones - the aforementioned mob groups - edge out
these spammers in capability and perserverence. An individual spammer
can be tracked down and shut down - often, angry spam recipients will
actually spam back with snail mail - post office complaints often
disrupt spammers enough to make it worth it.

The groups, however, are much more fluid and have greater resources.
In a business with such a low investment, resources can be used still
to create backup ISP accounts, develop new tools, and other
activities.

These groups have some ISPs so frustrated that they sometimes even
shutoff some countries, such as Korea, China, and Russia, from their
networks, until some ISP eliminates the offending users.

It's a sitcky situation, even with single spammers. The groups need a
new strategy to be taken down, but as of yet no method has become
clear. Busts can't be carried out easily in these countries, so other
methods will have to be employed, but what else can be done? It would
require major changes to email architecture, and that's something many
people don't want to do because it would cause many disruptions.

There is a much simpler solution for email spam. Take out the free
factor to email. In other words a sort of electronic post office, and
charge senders to send e-mail.

If it were free to mail things in the real world none of us alive
would be able to reach our homes due to the piles of mail.

Probably another of my brilliant ideas someone will make into a reality. 

I had fingerprint reading technology down years ago to get in cars and
be able to start them, problem was what if you cut the finger badly,
had too much dirt on your finer, or wanted to loan your car to
someone, and lastly how would the valet get the car to return it to
you.  Of course I wasn't nearly as bright then as I am now :-)

Actually, the idea of charging 'postage' for email has been around for
a long time. While Bill Gates is one of the biggest supporters, even
Microsoft's reported project dates of 2001 aren't the first mention of
the idea. (http://www.cnn.com/2004/TECH/internet/03/05/spam.charge.ap/)

The idea has a couple of hurdles. First, one of the biggest advantages
of email is that it is free, and hence a huge cost reduction. Postage
would negate that.

Also, to work, it would have to either completely rebuild email
infrastructure from the ground up (costly and hard to push) or simply
be a band-aid solution over regular email, in which case a customer
could choose only to receive 'stamped' mail, but then legitimate
non-stamp users can't communicate.

And it implies everyone could agree on a technical format.
Software-stamps? Forging, multi-platform support, and
authority/responsibility problems would dominate.

But think of it this way: local calls are always free, right? So, why
don't I get called day and night by local advertisers? Because I can
physically access their ringable necks, and because I can return in
kind with calls. The only way to stop a spammer is no make his life
inconvenient through snail spam, or to harm him via fines and jail
time.

Enforce these - find a way to make a spammer's presence known about,
and then deal with them.