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Is your affiliate program working for you? Or are you working for them?

Awhile back I recommended that my Northern Colorado Writers newsletter readers join  Amazon Associates, Amazon’s affiliate program, because it was a good fit for anyone who blogged about books, movies, technology, house wares and even food – all your affiliate products in one place!

Well, so much for my advice. On March 8, 2010, Amazon fired all its Colorado affiliates due to new legislation enacted by some of our Democratic state representatives, Colorado House Bill 1193 (CO HB-1193). You can read the details by searching “Amazon” at the Denver Post’s website or reading my affiliate tax posts at this blog.

Even though Colorado online marketers, bloggers, and groups like the Performance Marketing Association were able to get language out of the bill that affiliates did not constitute a nexus (physical presence) in the state, Amazon still gave us the ol’ heave ho. While I never made much money with Amazon, I was saddened to be dropped after being with them for nearly six years without as much as a goodbye hug.

Should you try other affiliate programs?

So what can a poor blogger do, except play rock ‘n’ roll band? (My apologies to the Rolling Stones.) Well, there are other affiliate programs out there, though some of the big ones like OrientalTrading.com have pulled out of Colorado and Overstock.com has threatened to do so, too.

If you write about books and movies, consider joining Barnes & Nobles’ affiliate program. HB-1193 does not affect them since they already have brick and mortar stores in our area. The program works through Google’s Affiliate Network and your Adsense account. If you review products, becoming an Open Sky shopkeeper is another option.

If you are lost about where to start, consider signing up with Google’s Affiliate Network and choosing from their extensive advertiser/affiliate program list. Another source is the Merchant Nexus Database where you can seek merchant programs that already claim nexus in your state of residence or are already collecting sales tax on purchases made to customers within your state. (Thanks to Jen Goode for the info.)

Will your readers buy from you?

After the Colorado Amazon kerfuffle I sat down, looked over my numbers and realized that I made less than a dollar a day on all my blogs as an Amazon Associate. That would have been fine if I put up some affiliate code in side bar and never did another thing. However, I was constantly linking to items on their site, which took time and effort. Looking back I realized that being an affiliate was not worth it.

Why was that? Well, I have decent traffic on my blogs, but not a lot of returning visitors. People value the recommendations of reviewers they trust and buy on those recommendations. Without a loyal community of followers who would buy products I recommended, I could not be a successful affiliate seller for Amazon or anyone else.

Now I am working on building my community at This Mama Cooks! by doing things like sending out a regular enewsletter, engaging readers with giveaways, always replying to their comments, and reaching out to them on my Twitter and a Facebook Fan Page.

How do you engage your community?

More on the Colorado Amazon Tax

Just a listing of pro and con articles for further reading on the effects of Colorado HB-1193, the so called “Amazon Tax,” and Amazon firing its affiliates in Colorado:

• Colorado Screws Amazon and Its Affiliates by Diana Hsieh
• Stop the 'Amazon Tax'! by Ari Armstrong
• Beware the Amazon by David Harsanyi, Denver Post columnist
• Colorado Democrats strangle Internet entrepreneurs by by Michelle Malkin
• Guest commentary: Amazon's bully tactics by State Reps. Jack Pommer and Mark Ferrandino in the Denver Post
• Amazon’s dropping of Colorado affiliates over tax law - letters to the Denver Post

Pay as much attention to the comments as you do the articles and blog posts.

Publicizing Amazon's affect on Colorado affiliates

This went out to friends and members of the Colorado Online Marketing Association last night from Jen Goode:

I am assuming you’ve heard the news that yesterday morning Amazon terminated all affiliates in the state of Colorado. It’s since become wide spread news and all types of media are looking to talk with people that are financially affected by this action.
If you are interested, please contact any of the following people:

TV: News hour - looking for people who got hit hard by Amazon's termination, who can be in Denver on Thursday, and who might want to be interviewed on TV This could be very important for this fight, and especially for the rest of the country. Please email/call Rebecca Madigan directly.

Rebcca Madigan rebecca@performancemarketingassociation.com
o: 805.445.9700 (PST) m: 805.469.1496

VIA HARO - Media Outlet: (Anonymous)
Query: Amazon "laid off" affiliates in Colorado recently. Can people build real businesses around affiliate programs? If you're
currently an affiliate and have built a substantial biz around
Amazon sales, get in touch. query-5g2@helpareporter.com

Dave Taylor - Huffington Post
If you made $100.00 or more per month from Amazon, please contact Dave at twitter/davetaylor or d1taylor@gmail.com. 

If you haven’t already, make sure to join the Facebook Colorado group for updates send out by COMA (Colorado Online Marketing Association) http://www.facebook.com/group.php?gid=5565038355

Thanks again for all your support!
Jen Goode

Also, the Denver Post ran two excellent editorials on the Amazon affiliate mess in Colorado:

• Amazon's use of human shields evil by Mike Littwin
• Online tax issue needs federal fix by the editorial board of the Denver Post

Amazon Tax laws fail to raise money and will worsen state budgets

Read the post "Amazon Tax" Laws Signal Business Unfriendliness And Will Worsen Short-Term Budget Problems at TaxLaw.org. Their eight page report (PDF) found that:

• Amazon taxes are unlikely to produce revenue in the near term. New York continues to face a lengthy legal constitutional challenge. Rhode Island has even seen a drop in income tax collections due to the law.
• Amazon taxes do not level the playing field between brick-and-mortar and Internet-based businesses because they require Internet-based businesses to track thousands of sales tax bases and rates while brick-and-mortar businesses need to track only one.
• Unconstitutionally expansive nexus standards like the Amazon tax undermine legal certainty, burden interstate commerce, and harm economic growth.

The Tax Foundation is a nonpartisan tax research group based in Washington, D.C. Their mission is to educate taxpayers about sound tax policy and the size of the tax burden borne by Americans at all levels of government. From its founding in 1937, the Tax Foundation has been grounded in the belief that the dissemination of basic information about government finance is the foundation of sound policy in a free society.

Update on Amazon firing its Colorado affiliates and What local legislators are doing about HB-1193

Colorado business people are up in arms about Amazon ditching their Colorado affiliates. I’ve heard from several people who are losing 10-25% of their annual business. Some are considering moving their businesses out of state. This just shows how Colorado is actually losing money by keeping HB-1193 on the law books – lost revenue equals less income tax.

The local media has FINALLY decided that this in an important story. I heard the Amazon story reported on a local NPR news show and the Denver Post ran a story in today’s paper - Amazon.com drops Colorado retailers after tax law enacted. As I write this there is over 100 comments. People are obviously upset at both Amazon and our state government.

What can I do about the Colorado Ad Tax?

First, contact your local representative letting him or her know of the current impact of HB-1193, Their contact information can be found through the directories on the Colorado General Assembly website.

Second, we need to prevent other affiliate programs from following in Amazon’s steps. The Colorado Online Marketing Association (COMA) is asking that Colorado Affiliates please send letters to your merchants to prevent other withdrawals of affiliate programs:

Dear [affiliate manager’s name],

As a Colorado-based affiliate and valued affiliate in your program, I am reaching out to you to give you more information about the advertising tax in Colorado (HB1193).

Amazon sent a termination letter to Colorado affiliates today. I want to make sure your company understands this move by Amazon did not have to do with any affiliate nexus clause in the law. Affiliates do not establish nexus for out-of-state merchants.

The termination of Colorado affiliates by Amazon is apparently a move to protest against the final language of the bill, which puts a tremendous burden on merchants.  As a merchant you should definitely consult legal and tax experts about this issue.

Upon hearing about Amazon’s termination of Colorado affiliates,
Colorado Senator Brophy, a big supporter of the affiliate cause in
Colorado, tweeted that he will be reaching out to Amazon about this issue. @SenatorBrophy: I have call into Amazon about affiliates – will seek emergency legislation if necessary to fix.

To reiterate, the new law does not include anything about affiliate nexus. I ask that you carefully consider all the facts regarding Colorado HB1193, so we can continue our valuable and productive relationship.

If you have any questions, please feel free contact me.

Respectfully,

[Your name]

[Email address]

[Phone optional]

Third, you may also want to join their PMA CO Google Group to get the latest news.

Finally, let COMA know if you have received notice from any other merchants terminating your affiliate partnership due to HB-1193. You can contact them via Facebook or Twitter or by leaving a comment on their website.

So far the list includes:

• Amazon
• Oriental Trading Co.
• Terry’s Village

Colorado HB-1193 Update: Amazon pulls its affiliate program out of Colorado

Even will all the hard work by online marketers and bloggers here in Colorado, Amazon sent notice this morning that they are closing the accounts of their Colorado affiliates.

According to the Performance Marketing Association blog, “HB 1193 was passed without ad tax language. However, the remaining language may impact out-of-state retailers, who should consult legal and tax experts.” So, it’s no surprise that Amazon gave notice – exactly what we told representatives would happen if HB-1193 passed.

Even though I make less than a dollar a day with Amazon, I’m still saddened by the news. I’ve been working with the Amazon Associates Program for almost six years and it’s been one of the few affiliate programs that have worked for me. Still, with the minor amount I earned, I have to wonder if copying and pasting affiliate code and including disclosure language was worth my time. Probably not.

Amazon cancels Colorado affiliate program

Here’s the email they sent out.

Dear Colorado-based Amazon Associate:

We are writing from the Amazon Associates Program to inform you that the Colorado government recently enacted a law to impose sales tax regulations on online retailers. The regulations are burdensome and no other state has similar rules. The new regulations do not require online retailers to collect sales tax. Instead, they are clearly intended to increase the compliance burden to a point where online retailers will be induced to "voluntarily" collect Colorado sales tax -- a course we won't take.

We and many others strongly opposed this legislation, known as HB 10-1193, but it was enacted anyway. Regrettably, as a result of the new law, we have decided to stop advertising through Associates based in Colorado. We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through Associates based in other states.

There is a right way for Colorado to pursue its revenue goals, but this new law is a wrong way. As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly. The US Supreme Court has defined what would be constitutional, and if Colorado would repeal the current law or follow the constitutional approach to collection, we would welcome the opportunity to reinstate Colorado-based Associates.

You may express your views of Colorado's new law to members of the General Assembly and to Governor Ritter, who signed the bill.

Your Associates account has been closed as of March 8, 2010, and we will no longer pay advertising fees for customers you refer to Amazon.com after that date. Please be assured that all qualifying advertising fees earned prior to March 8, 2010, will be processed and paid in accordance with our regular payment schedule. Based on your account closure date of March 8, any final payments will be paid by May 31, 2010.

We have enjoyed working with you and other Colorado-based participants in the Amazon Associates Program, and wish you all the best in your future.

Best Regards,

The Amazon Associates Team

For more on this, check out Amazon Fires Its Colorado Associates from radar.oreilly.com.

Getting the word out about Colorado HB-1193

From my previous post, it looks like things are A-OK and that the affiliate language has been removed from HB-1193. However, I’m not sure the word has gotten out yet.

Yesterday the Denver Post ran Bill spotlights obscure tax: Out-of-state firms may have to tell Coloradans who buy on the Web that they owe sales tax, which didn’t tell readers about the changes. Well, the article didn’t until you read the tacked on note at the bottom:

Bill changed significantly

An online-sales-tax bill heading for a vote today in the state Senate was changed significantly from an earlier version. The initial bill would have taxed purchases made by Colorado consumers through affiliate marketers, whose websites direct people to retail websites. That provision encountered strong opposition from affiliate marketers and was dropped. Online retailers have severed ties with affiliate marketers in the three states that have passed similar online- sales-tax legislation, said Rebecca Madigan, executive director of the Camarillo, Calif.-based Performance Marketing Association. The earlier version of the bill would have generated an estimated $4.7 million in tax revenue. It's unclear how much the new one could generate.

I’m sure this was added instead of rewriting the whole article, probably due to a tight deadline.

On February 9th, I received an email from Representative Cheri Gerou:

Thank you for your e-mail and your involvement in the legislative process.  As you are probably aware, the Colorado Senate approved the passage of HB 1193 during second reading on Monday evening.  It is scheduled for a final vote and will pass.

Please know that I fought hard to defeat this bill and I voted against this tax increase.  I understand the impact that will result with this legislation.  You may have seen the editorial in the Denver Post, they are opposed to this tax.  Perhaps the Governor will choose not to sign this legislation - right now, I believe that is our only hope.

I wish I had better news to share.

Best regards,
Cheri

I pointed Cheri to the PMA Blog and she responded on February 10th:

Hi Anne-Marie -

Thank you for your e-mail.  I actually couldn't say where the bill will end up.  Until we see the bill back on the floor of the House, we won't know what will happen. I guess the best advice is to "stay tuned."

Cheri

Time to celebrate! The Colorado HB-1193 advertising tax has failed

According to the PMA blog, the Colorado Advertising Tax is Dead. Today’s agreement has completely removed the inclusion of affiliates establishing nexus. Instead, Colorado HB-1193 is only focused on collecting use tax. The amended bill was released this morning.

We truly did it! This change is due to everyone’s hard work in testifying, writing letters and emails, going to the Capitol, posting on Twitter and blogs, leaving messages on state representatives’ Facebook pages, and making phone calls to committee members.

Most of all it’s due to the hard work of the PMA getting us all organized and keeping us updated on the latest news.

Thanks everyone!

We made a difference in Colorado HB-1193!

Rebecca Madigan, Executive Director of the Performance Marketing Association updated us on the latest in the proposed Colorado affiliate tax in Colorado Advertising Tax passes out of Senate Committee.

Even though the bill passed out of the senate finance committee, there is some good news:

We were given an opportunity for an amendment that would exempt online affiliates from establishing nexus for out of state retailers.

Rebecca then writes:

This amendment, if completed as promised, may make some merchants comfortable enough to continue working with Colorado affiliates. For others, it may not.

…The best option for our industry is if this law does not exist. We will continue to fight for a repeal of the law, because affiliates do not establish nexus for out of state retailers.

What made the difference? Involvement by Colorado business people, bloggers and website owners!

The enormous affiliate effort to fight this bill, involving well over 150 people, was something the politicians didn’t expect, and didn’t see from any other group for any other bill. Phone calls, personal visits, letters, postings on the legislators’ Facebook pages and Twitter accounts, attendance at hearings, hand delivery of packets of information – this went on steadily for 2 weeks. This barrage of activity made a huge impression. The legislature understood the impact on the 4,200 affiliates in Colorado, realized the devastation that would result, and agreed to amend the bill.

Just show you how even us small business people, mom bloggers and solopreneurs can get the job done!

The Denver Post Says NO to Colorado HB-1193

Today’s Denver Post editorial, Eliminate some of state's tax exemptions, came out against HB-1193:

We also have concerns about House Bill 1193, which would amount to what some call the "Amazon tax." The bill would require online retailers to collect sales taxes from state residents if the retailers have an affiliate in the state that actively solicits on behalf of the retailers.

Retailers with stores in the state who have to compete with online retailers make a good point about the relative disadvantage they are at by having to collect sales taxes when online interests do not.

But that is an issue that should be addressed at the federal level given a 1992 U.S. Supreme Court decision that said it would be unduly burdensome to force retailers to collect sales taxes on behalf of other states.

We are concerned the Colorado bill would prompt court challenges, as similar measures have in other parts of the country, and ultimately result in costing more than it raises, which is estimated at $4.7 million a year.

It would be wiser to wait until this issue is settled by federal law before attempting to collect such a tax.

They also ran a guest commentary, Equity for Main St. retailers in Colorado, by Christopher D. Howes, president of the Colorado Retail Council in response to Vincent Carroll’s column, Amazon buyers, beware: State has it in for you.

What Howes fails to realize is that if the law passes, Amazon and other online merchants will cancel their affiliate programs to protect their tax status. Even if they didn’t, they’d still have advantages over brick and mortar stores such as price, selection and convenience.

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