The advertising tax has left a lot of collateral damage, in the form of countless affiliates losing their source of income, in states where it has been signed into law.
This is something that has been on my mind a lot lately with Texas House Bill 1317, since I’d be dumped by a lot of affiliate programs I’ve promoted for years if the bill is signed into law.
So, I’ve got mixed emotions with the news that WalMart is pitching affiliate exiles to join their affiliate program, just as Barnes & Noble recently did with an open letter to affiliates.
I am conflicted on this, since these companies with existing brick & mortar operations are in support of the very legislation that could get me fired as an affiliate.
Who should I like here… companies I have been loyal to for years who are willing to drop me without looking back, or companies that support the laws that would hurt my small business, and so many others.
All I know is I just want to drive business for these companies. I don’t want to be a political pawn.
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I don’t know about their “tremendous lobbying efforts” – they’ve been using affiliates as pawns.
And the fact that they still have NY affiliates was used against us the other day in TX, as the author of the bill asserted that Amazon didn’t boot affiliates there and tax revenue has been raised, so that could happen in TX.
Side with Amazon. I read your post when you first wrote it, but have thought about it many times. I live in Minnesota where we are fighting a proposed affiliate nexus tax as well. Amazon is funding top-notch lobbyists to rally against the bill. They are funding the lawsuit against the state of NY that will likely go to the Supreme Court and settle this issue once and for all. They are doing everything in their power to stand against this legislation. In fact, the idea that they’ll drop me as affiliate stinks, but it is also part of what we are using as a talking point for our legislators; “Look, they’ve said they’ll drop me. It will hurt small business. Don’t do it.” At least in Minnesota things are looking good for affiliates, thanks in part to Amazon’s tremendous lobbying efforts.
Here in NC I have been dumped by Amazon, Overstock, and a slew of other companies after the nexus law was passed by this state. It really has forced me to use other forms of monetization on my site though, which has been good. But I can’t see this law as being a good thing for ANY state, since they just loose that affiliates income and perhaps the affiliate for those that must move to another state to keep their jobs,
I suspect that Amazon probably wanted to test the ubiquity of their own brand power. ergo Do they really need affiliates? What happens if they drop a few hundred here or there in spot examples due to something like this. As a shopper, I’m very likely to start my online search for any given thing, by going directly to Amazon.
I figured you would be…involved with a team or something to do this. It can’t hurt.
Whatever happens, I wish you well.
You’ve made me giggle… “…car battery at Wal-Mart yesterday.”
Yes. Amazon has got some nice tools…
Yes, I know what you mean. Something like a wasted investment…
I get the impression, as I received a letter from Amazon within the past few weeks…alerting…the possibilities… that Amazon is also hoping that people will fight the fight on their behalf.
Personally, as a shopping resource, I think that Amazon has a nice marketplace with good, quality reviews that are in many ways beneficial even when they’re negative. I’ve bought some books from some of the people in the marketplace and saved some money, too. I just see that they can make some adjustments or leave the way for others to come in to service the needs of the public.
Their tools will still be there for the benefit of those whom they allow to continue working with them. As an Amazon Associate, I’ve also noticed some needs for improvement or some adjustments that I’d like to see in how some things work… They’re not going to die, I don’t think.
Yes, I know what you mean. It’s happening. To all of us, if only out of fear. I forget who ran about a year ago…releasing Illinois affiliates… Now, it doesn’t even matter. I got better… Besides, some companies don’t run, they adjust.
I do know what you mean about the difficulties of managing many tax rates…the financial and technical upon smaller businesses. Still, it’s part of doing business. We all have to do it, if we’re in particular businesses, even if just selling on eBay from the Dining Room… There are resources to decrease the burdens, with a little research, books, and some software programs. It can be done, whether we like it or not, and if only it slows us down just a little. It isn’t impossible albeit maybe a little tedious or like “drudgery”.
Besides, Shawn, isn’t it that all of this started with Amazon, a big, online, merchant/retailer? People have been selling on eBay for years… Some of them from their kitchens, living rooms, and dining rooms. I know that I’ve paid taxes on orders from Illinois sellers… If one starts slowly, widening out and making adjustments, to implement the tax settings and fulfilling the requirements, it doesn’t have to be so “overwhelming”…and, in the end, it’s worth it because you can have a wider sales base, if I’m saying it correctly.
I just don’t think this whole thing is as big a deal as some make it out to be… I think much of the outcry is purely fear. I’m affected as well. They say, in our state, that our Governor has only to sign the bill. I’ve already had some relationships begin to end starting as soon as the law passed in New York… I’m surviving. And, I will survive no matter what happens because something always opens up, or there is always someone willing to work with me. Also, I have found that my prospects only get better and better.
In fact, some of those guys did me a favor in dropping me. It inspired me to go out and do more to get better merchants…and apply to some that I’d never apply before feeling a little “intimidated”.
There are some merchants, in my case, that made adjustments…and continue to work with me regardless of how they were affected to make the change to collect taxes or whatever… I respect them more.
Honestly, it seems to me that Amazon is hoping to “prove” something or make a stand. It’s going to work out, either way. Some companies have already begun to make adjustments for the better. If any thing, it’s like it only awakened a few…and in a positive way. Adjustments are being made all over.
I’m not saying that Amazon is right. They can fight their battles…whatever they choose…in whatever they believe is right. I just know that it will all work out, it’s not that big of a deal. Maybe, because of how I saw– how phone prices came down, phone services, in general when the Bells were divided or whatever. I can’t think exactly right now… I just know that usually, it always balances out, in the end, for the better…and we benefit as a whole. It may be difficult at first, adjusting. A lot of transitions can be that way… But, sometimes, if we plan right…things can move very smoothly. If anything, it’s a good time to diversify.
I believe that people who have real, quality, meaningful content on their sites…will weather this storm. I think that the most whom will suffer are those that aren’t really investing in quality. Those whom have diversified so that they also work offline…where it isn’t in opposition to the laws in how it applies to them and creating “nexus” in their areas can also continue to make it although I think that this particular, offline work is something that is prohibited in New York.
Things have been affecting Affiliate Marketing since, I remember, 1995. It’s turning into a proofing ground in my observation. It’s becoming harder to “hit and run”…and requires more integrity and in-depth, quality work online. Things have changed… But, look how much less we land on sites that are just negative, link-farms, or have no quality content…and contribute nothing…just so that someone can get paid… It’s a challenge, yes. But, the internet has improved. And, we hardly ever see sites any more with a thousand pop-ups just so that some one can get money…because we landed there… The bad affiliate marketers will have to work harder. But, I don’t foresee it breaking the good ones…only requiring, in some cases, some adjustments…and we’ll move on.
I think that most people are just afraid because they don’t know really what’s coming… It’ll be fine. It’ll weed out some more insincere “players”… Those firmly planted will continue to stand. And, will flourish.
Thanks Jaz -
It’s still somewhat early in the process here, so my focus is on trying to educate the legislators.
If this is really worrying you…I did see two versions of a form made available at ABW regarding working with companies like these two as it applied in New York, I think. Maybe, forms like those two, modified as necessary to apply in Texas can help you regardless of whether the bill passes or not. It would be a matter of wording. That can be your “loophole” in a sense.
I’ve read that the wording as it applies in Illinois, if the Governor signs it reads, “contract” versus agreements, for example…
I’m unfamiliar with the terms and what’s going on in Texas beyond the general effect… Have a lawyer look over the forms that are at ABW and, maybe use them as a template to create your own as applies in Texas. Perhaps, a group of you can work together to get that accomplished. It may free Amazon and Overstock up to continue working with you despite the law change or its effects across the board, generally.
There’s always a way to get something accomplished and or done. It’s just a matter of finding it.
With regard to what I read in the form in how it applies in New York, I think it said something like you had to own the websites and it/they couldn’t be dedicated to advertising that merchant or products…something like that. The point is that it was like an affidavit, I think, in that you certify that you’re fitting within the terms and not doing something against what the law states there, that would actually create their version of a “nexus”. I can’t remember exactly. However, if you view the forms yourself and actually read them, you’ll see what I mean.
If you’re actually familiar with the wording and requirements and “fouls” where you are…then, you, together with a lawyer, perhaps can make the forms fit you. It’s said at ABW that the forms there are actually drawn up by a lawyer. They’re available for download. I can’t tell you how legitimate they are or how well that they can work for you only that you may look at them…and gain some insight and maybe a good idea, more focused about how to move ahead and attack your own problem.
There’s always a way.
Hi Jaz -
My first concern is certainly my family. Affiliate programs don’t hold any place on Maslow’s hierarchy of needs.
I don’t take any business personally and have no gripes with Wal-Mart and Barnes & Noble. I got a car battery at Wal-Mart yesterday.
I’ve been impressed by Amazon’s investment in affiliates, in terms of their forum, wide variety of tools, etc.
So the overall issue seems like a shame in the end.
Hi Jaz -
I was being a bit hyperbolic with the orphan statement – parties on both sides know exactly what they’re doing and the cause/effect of their actions.
I get both perspectives, but that doesn’t mean I like them.
> It is nothing for a company like Amazon or Overstock to collect and remit taxes… Small businesses have to do it…
I don’t agree there – it’s a big undertaking to work with different tax rates all over the country. The bigger companies like Amazon and Overstock could integrate it without so much pain, but it is a financial and technical hardship on smaller online retailers.
Don’t get me wrong – I am not going to collapse if the law passes – I have a very diversified income. But I’d still hate to see it happen to myself personally and so many others.
One of the big issues is that it’s not just Amazon and Overstock – there would be a domino effect, and that is bad for affiliate marketing.
How are the ones that may be inviting you to work with them making you an orphan or even made you one? If Amazon and or Overstock decide to drop you as an affiliate, end the relationship with you, that’s their decision. Even if Wal-Mart and WalMart.com and or Barnes & Noble asked for changes in how taxes are collected within these United States, Shawn, it isn’t their decision in how you’re treated as an affiliate of either Amazon or Overstock.
The decision to release affiliates is either Amazon’s decision and or Overstock’s. Either of the two companies can choose to collect taxes whether or not they have a physical location within the states where their items are sold or shipped, purchased by residents, whatever… They would be the ones releasing you as an affiliate in relationship to them. If both Barnes & Noble and Wal-Mart and Wal-Mart.com are collecting taxes and remitting them, don’t be angry. It helps the people of those states, even if it only releases the citizens of those states from having to keep track of the items purchased…to file “Use Tax” later. It is nothing for a company like Amazon or Overstock to collect and remit taxes… Small businesses have to do it… If a company doesn’t want to be bothered…they don’t have to sell products where it’d be required. It’s a matter of choice, Shawn.
And, in your case, don’t keep all of your eggs in one basket any way. Overstocks terms, in general, are not that “great”… Amazon’s can be “restrictive” with their “you and your household, family, ‘blah, blah, blah’” terms and conditions… (Making a point.) There are other companies with better terms and conditions, in general, with whom you may align yourself as an affiliate publisher… Some may be smaller; however, the benefits can be greater in the long-run, especially if you discover a niche…and or market particular things really well.
Don’t worry too much. Saying that you’re concerned in Texas must mean that you did sell your house and re-locate. Maybe, you’re just a little afraid and worried. You can make it. You’ve made it this far to have built up a company, a name…partnerships…run a magazine… Forgive me if I haven’t said it all correctly; however, you started with much less… You can make it. Diversify and employ wisdom. There are many great programs, products, and companies that you haven’t even begun to work with yet… Besides, there may still be a lot of life left, yet in some that you already have and that only require a “refresh”.
Don’t make this “personal”, Shawn. They are companies, businesses…not flesh and blood. You really don’t have any “loyalty” to them in the sense that you owe them anything that may cost you and your family the peace that you have and should keep, treasure…honor even. Don’t “cry over this spilled milk” and or something that hasn’t even “happened yet”…in a sense… It’s not worth it. Move on.
I’m saying this as someone who has endured much and come through a lot and great loss. It’s not as big a deal as you yourself can make it seem in how you choose to look at it and accept every thing that is happening. You’ve got the talent to grow beyond this little thing. If Amazon and Overstock both decide to “drop” you as an affiliate or end the relationship…it’s their loss. Lend your talent to greater things. Move on ahead. Letting go their affiliates, especially good ones, doesn’t speak much for these companies any way. They could simply collect the taxes and remit them. It’s not even really a matter of principle in this case as it would help and benefit every one. The converse of that, however is if they choose not to…it also can benefit every one as new companies and businesses grow up in their former places as they abandon and retreat…as well as other companies making their terms, offers, and products more available and at better pricing.
Amazon and some other companies incorporate shipping into their prices. Sometimes, it’s just better to pay a lower price and include the cost of shipping per actual orders and weight shipped. Including taxes.
Sometimes, when companies get into big, stupid fights, we win.
Start looking at all of the openings and possibilities that are yet to come…where you can strike next… This can be a wonderful time if you focus upon what’s ahead…and not so much the loss of what you’re leaving behind.
You can make it. We all can. I know, I will.
Good morning, Shawn.
I can’t say that many companies today actually exercise any loyalty towards their employees or independent contractors. If any thing, I’d say your first concern should probably be about your family…and how you’re going to care for them, and go from there.
With some of these companies choosing to drop affiliates rather than making adjustments in how they conduct business speaks a lot to the kinds of thoughts that they’re having with regard to the affiliates with whom some of them have worked for years.
I appreciate what Mr. Bumeter has said…and the overall meaning for and to the communities. Wal-Mart receives a lot of negative talk against it, but it does good, too. At least, it’s working to give back to the communities where it operates. Raising my family, I’ve benefited a lot from steps that Wal-Mart has taken. And, he’s right. Some of the companies that are not collecting taxes are indeed publicizing that they don’t in order to achieve the sale, to make themselves appealing, to gain the shopper’s buy…as a marketing ploy.
Some companies or their management agents are quick to drop affiliates even to save “face”…or for lesser reasons. For them, often times…it’s all about the “money”.
Affiliates are not often appreciated as people…
With regard to the Television stations, newspapers, magazines, and other similar outlets, I, too, await legislature saying or doing something about them. One of our local stations is a big-time affiliate of Groupon…offering exclusive Wednesday and Friday deals… Not once have I ever heard the talent on this station declare the station’s “affiliate relationship” with Groupon and have only heard them refer to the Groupon company and rep as “our friend(s) at Groupon”… I’ve never heard a disclosure of fact that they’re in an affiliate relationship and receive a “bounty” or commission if local citizens claim the deal…or even that they’re paid as “advertisers”. I may be wrong, but I’ve never noticed that the laws and rules affecting bloggers are applying to the television networks, newspapers, and magazines…the media… It doesn’t really seem fair. My daughter says that every one has to assume that they’re “advertisers”. I disagree. They present and “act like they’re ‘friends’” and just found this “great company” offering the locals “great deals that will benefit them”. I have never heard the talent refer to Groupon as a sponsor. Not once. It seems that there are double standards at play.
Regardless, Shawn, whatever happens, you’ll be okay. It’s just a matter of adjustment. There will always be other products and businesses that you believe in, trust, and can recommend.
In my opinion? It makes good, business sense for companies like Wal-Mart and Barnes & Noble to go after dumped affiliates. It also makes good, business sense for some states to invite “big company” affiliates to re-locate.
How many more states can Amazon afford to lose before it is limited or squeezed out when all it has to do is collect and forward taxes? Whereas the companies collecting and forwarding taxes are gaining a stronger foothold every where that Amazon and others retreat. Balances shift. Adjustments are made. Life goes on. Besides, it may open doors for more businesses to grow up in their former, fertile and primed ground.
No affiliate can count on a merchant to be there even at the end of the month. An affiliate can hope that the merchant will still be around and a relationship will continue. There’s never a guarantee that I’ve ever seen, at least, that a merchant will be around and in relationship with an affiliate for even six months. I don’t think that any affiliate that is thinking that a merchant will be there is being square with himself A merchant can drop an affiliate, in some instances, without even a 7-day notice. And, some do. And, some do with even less notice.
Being an affiliate means having a diversity of products and merchants…and a clear sense that nothing is “permanent”…it all can change at a moment’s notice. Even an out-sourced, affiliate management company can begin to compete with the affiliates with whom it has agreements in place that it will “not compete”…becoming an affiliate itself and marketing and advertising the products and services of the merchants that it manages…and this with no full disclosure of what is happening or that it’s business model has changed; that this recognized, out-sourced, affiliate management company has now widened out into the affiliate publishing business as an affiliate publisher…failing to notify the connected, associated, affiliated publishers with whom it now competes and with whom it has agreed and stated that it does not compete…
Nothing is guaranteed. Affiliates can only be smart and keep their eyes open, read the scene…and climate, make adjustments and move along…
Affiliates have to exercise wisdom. Businesses are not always thinking about the individuals whom are affected by the activities in which it engages from within a particular wisdom. Money is the only thing that is often considered. How to get more, momentarily versus the long-run. And, these companies burn their bridges…damage relationships with the human beings with whom these companies work. Faith is lost, trust is sacrificed…a company’s good name goes down the toilet. It happens.
Affiliates can only exercise wisdom and make adjustments as is necessary, letting go where needed, moving along, beginning new relationships…continuing forward.
I don’t have any problem with recruiting affiliates by providing a better offer or program – I am just not so sure I want to get adopted by the ones that made me an orphan.
So do we need an Affiliate Code of Conduct now?
In the open world of marketing, as long as you abide by the rules, it is a free market of commerce and the consumer shall win in the end. People come and go all the time. When I led the Tickemaster program and they shut everyone down, don’t think that other ticketing programs didn’t swoop in and take some business to replace their lost income.
Ok…plug….talk to me if you want to replace your Overstock program with Nextag! ; )
Hey Robert -
I don’t know any tricks that a lawyer or CPA might be able to share – if it passes in TX, I’m hurt.
Hi Shawn, a lot of affiliate marketers have been telling me the same thing. Very disappointing to say the least. I can see why governments need money, and it was only a matter of time before all this started happening. It’s sad to see many affiliates just being dropped though.
I wonder if there is another loophole for having a company registered in another state where these laws aren’t being passed? I know many incorporate in Delaware and Nevada for tax reasons, perhaps this is another?
I don’t know that this would really be poaching when they’re targeting dumped or soon to be dumped affiliates.
“an indirect loophole” here, a slippery slope there.
These layoffs related to employees and infrastructure costs do relate directly to brick & mortars, their physical footprints in a community, their staffs that receive services from the community.
It’s not apples to apples, by any means, when you look at companies with a real presence vs. online entities.
I am still waiting for this legislation to include newspapers, magazines and TV stations as affiliates when they advertise for companies without a tax nexus.
I am not a big fan of Walmart for a lot of reasons, and I have done a lot of business with them over the years, mostly as a former vendor. They run a very tight ship, and many a local community will offer a complaint at the drop of a hat when it comes to driving away small local retailers which kills local main streets, not to mention traffic problems around super wal-marts and vacant strip mall hell resulting from old (non-super) wal-marts abandoned.
All that said, Walmart collects sales tax on and off line and that goes back to the local community. In that one way they are a good corporate citizen. Amazon whom I’ve also done a lot of business with as a former vendor (somewhat comparable to Walmart) doesn’t and imho uses the fact that they don’t as a competitive advantage to compete with Walmart online.
Now you as a local citizen (and any of us) can pay our property taxes, and maybe or maybe not pay sales tax on items that we buy online when the vendor doesn’t collect it. But ultimately when the local government doesn’t get their share, it is ‘our’ government and we have to make up the difference or spend less.
I’m a libertarian and I’m all for reducing spending, but I’m also for fairness and level playing fields. When you simplify what is going on here, Amazon is benefiting from an indirect loophole that gives them a competitive advantage over Walmart at the expense of local communities and tax payers.
Taxpayers are footing the bill for Amazon, and the way things are going in local communities and states, they can’t afford to do that much longer. Not only can they not afford it, but as compared to other tough decisions like laying off police, firefighters, teachers, road construction etc. making Amazon collect taxes is a real easy target. I think the move that you cover here is significant, because Amazon’s burn the bridges and use affiliates as fuel for the fire strategy really isn’t sustainable. It makes for headlines a bit in the first few states that went this route, but there is no long term benefit here for anyone.
Yeah, that’s an interesting situation. It just reminds me of the fact of – as if they weren’t soliciting the higher volume pubs when they still were with Amazon anyway…
Poaching happens, just this is a lot more openly done IMO.
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