By Jim McCarthy Jun 30, 2011 0 comments

Amazon Terminates Affiliate Program in California-Just Sit Back and Watch the Money Roll In, CA!

As a totally inactive Amazon affiliate and a Californian, I got two emails from Amazon yesterday.

One said this: “For well over a decade, the Amazon Associates Program has worked with thousands of California residents. Unfortunately, a potential new law that may be signed by Governor Brown compels us to terminate this program for California-based participants.”

And later in the day, the second one said this: “Unfortunately, Governor Brown has signed into law the bill that we emailed you about earlier today.  As a result of this, contracts with all California residents participating in the Amazon Associates Program are terminated effective today, June 29, 2011. Those California residents will no longer receive advertising fees for sales referred to Amazon.com.”

The crux of the issue seems to be sales tax, and whether the state of California can collect them on Amazon’s purchases.  Amazon has carefully avoided creating a ‘tax nexus’ in California for a very long time, and having online affiliates has never been considered ‘nexus’.  Until now, it appears.
In other words, Amazon’s choice comes down to letting Californians continue to be Amazon affiliates or making all California residents pay sales tax on purchases on Amazon.  That’s a no-brainer, but it’s unfortunate.  According to Amazon’s letter, the bill was put forward by ‘big box retailer’ who want to take a chunk out of Amazon’s affiliate sales.  I’m sure they’d put it differently and say that it’s unfair that they have to collect state taxes and Amazon doesn’t.

Still, as one of the godfathers of online affiliate programs (I built one of the biggest affiliate programs in the world at the time at GeoCities and signed up tens of thousands of individual affiliates for Amazon and many others), I can’t really see this doing anything much for anyone.  No one really has the breadth to replace Amazon as a go-to place for people who make a living on affiliate links, and California’s not going to realize much or any revenue from this.

In my view, it’s just bad government doing something because why not? That’s why.

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