Former Employees Allege Most of Ozy's 26M Newsletter Subscribers Were Purchased, Borrowed, or Kept Against Their Will

Eight days ago Ozy announced it was shutting down after reports that the news site bought traffic, overstated its cable deals, and at one point even had its Chief Operating Officer impersonate a YouTube executive during a phone call with investors. Then four days ago, Ozy's CEO said he planned to relaunch the company's newsletters (while looking for new board members) to try to instead revive the company. "Ozy Media boasts that it has more than 26 million subscribers for its newsletters," reports Forbes... "But former employees say this is another example of deceptive tactics at the embattled digital media company, with most of the email addresses on its newsletter lists either purchased, taken from other companies without their permission or added back to the lists after the recipients unsubscribed — a potentially illegal act." Three ex-employees with knowledge of Ozy's newsletter operations, who asked to remain anonymous because of non-disclosure agreements they signed, said the company on multiple occasions obtained large numbers of email addresses through marketing partnerships it formed with other companies and news outlets. Ozy would offer to send an email for the other company as part of the partnership, and some companies would then share a list of addresses for a supposed one-time message. Instead, the former employees allege, those email addresses would then be permanently added to Ozy's newsletter subscriber list. Among the companies they say Ozy collectively accumulated millions of email addresses from were the McClatchy newspaper chain and the technology magazine Wired, according to two of the former employees. Ozy would also buy in bulk email addresses from third-party websites like U.S. Data Corporation and Exact Data, ramping up the size of its newsletter following in order to fulfill advertising deals with its clients. After Ozy added batches of new addresses to its mailing lists, many recipients would attempt to unsubscribe from the newsletters only to be kept on the distribution lists and even re-subscribed under the direction of Ozy management, a potential violation of commercial email laws... Despite a "very small" organic audience and low engagement numbers, according to a source with knowledge of Ozy's newsletter audience, Ozy sent a pitch deck to investors over the summer for its Series D funding round that claimed it was achieving an email open rate of 25%, or (in Ozy's words): "2.5x the industry standard." Ozy founder and CEO Carlos Watson admitted that number was exaggerated during a Monday interview with CNBC, claiming it instead represents the engagement rate among Ozy's "best, most regular people." Watson still claimed this subset of Ozy's audience is between 10 and 12 million people. Forbes adds that there was no response to their request for a comment from Ozy, McClatchy, and Wired's parent company Conde Nast.

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