

Amazon Fires Colorado Associates - joshkaufman
http://radar.oreilly.com/2010/03/amazon-fires-its-colorado-asso.html

======
joshkaufman
Just got this e-mail from Amazon, terminating my Associates account -
effective immediately. No warning at all.

A few stats: in the five years I've been an Associate, I've generated hundreds
of thousands of dollars in sales for Amazon. (Tried to get an exact number,
but my Associates account is closed, and historical data isn't working
properly.) My referral commissions are typically $500-600 a month, with
seasonal spikes as large as $1,200.

This is a good lesson in counterparty risk - if my business was based
primarily on Amazon Associates, I'd be totally screwed.

Here's the full text of the e-mail:

====================================

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

~~~
patrickgzill
Wouldn't it therefore make sense to have a PO Box in another state, then set
yourself up again with Amazon? You are close to either Kansas, New Mexico, or
Wyoming, depending on where you are in CO...

~~~
joshkaufman
I already have an account with Earth Class Mail (handy if you don't want to
give people your home address if you work from home), so I set up an official
business address in Beaverton, Oregon and changed my address via the
Associates website.

Oregon doesn't have a sales tax, and I'm paying Colorado income tax on
anything I receive, so this should fix the issue while staying on the right
side of all applicable laws. Will update if/when I get a response from Amazon
regarding my request to reinstate my account.

~~~
joshkaufman
My account has been reinstated. Looks like I may have to incorporate an LLC in
Oregon, but that's easy to do.

Here's the e-mail I received from Amazon:

==================

I confirmed that your contact and payee addresses have been updated. Because
you have changed your state of residence, your account has been reinstated.
However, we want to be sure you are aware that you may be asked to provide
proof of residency at your new address. If this is the case, we will contact
you with instructions on what documentation to provide and the submission
process for this documentation.

Thank you for your participation in the Associates Program.

------
philwelch
"It's one thing to be fired for something you did (hey doofus, don't cause a
heap of MPAA infringement notices to land on Amazon's desk because you were
running the new Pirate Bay on EC2) but it's entirely another to be fired for
something outside your control."

If your own state government is something you happily and comfortably state is
"outside your control", getting fired by Amazon is the least of your problems.

~~~
dustingetz
how do you propose he control it? by writing his senator? hahahaha

~~~
krschultz
Senators are very responsive to small issues like this. The elected official
will listen to polls or their own values on the big issues like healthcare or
abortion. On the little issues that are extremely important to a small group
of people but largely unimportant to the rest, the senator will hop onboard
with the vocal minority very quickly. 99% of the state might prefer the tax
but it doesn't real change their vote, and 1% might vehemently oppose it and
it will change their vote, the official will almost always go with the 1%.

I've been part of that vocal minority and had elected officials intervene in
tiny issues. You'd be very surprised by what can be accomplished by 20-100
angry people.

------
oldgregg
Smart move. They shouldn't acquiesce to a small group of largely ignorant
politicians. Imagine if every web app you wrote was required to have unique
compliance code for every state-- not a good precedent. Besides, I imagine
most large volume affiliates will just get checks sent to their uncle in
Dubuque. The only thing they should have done differently is sent out a snarky
email giving people one week to "move" to another state before deleting their
account. Reminds me a little of Wal-mart shutting down stores that attempt to
unionize, who can blame them?

(same dumb shit is going on with medical marijuana. colorado voters amended
the constitution now the legislature is trying to pass a law that only doctors
THEY approve can write recommendations.)

------
mattmaroon
Can't blame them at all. It's a simple cost benefit analysis. They surely can
easily estimate whether or not the cost of charging sales tax on items to
Colorado residents (presumably in lost sales) is greater than the amount they
lose from Colorado affiliates. You'd assume that because they haven't done the
same thing in other states with similar laws.

I do Facebook development and I'm always cognizant of the fact that my
continued success depends on their good will. Everything I do is with that in
mind, both in terms of making sure my interests align with theirs and in
building up a fallback plan.

~~~
hga
As far as I know they've shut down the Affiliate programs in every other state
that's done this, except for New York (I think the others are North Carolina
and Rhode Island).

------
FluidDjango
My family in CO always described it a rather a cowboy state ("don't nobody
tell _me_ what to do), but say that as of late the desperation to balance the
budget is manic.

IMHO it's manic enough to shoot their own small business people (by squeezing
services like Amazon in this kind of corner).

~~~
pyre
> _IMHO it's manic enough to shoot their own small business people (by
> squeezing services like Amazon in this kind of corner)._

But if Amazon pulls out completely, then they don't get _anything_ while at
the same time hurting their small business people. Where is the gain?

------
mbreese
Didn't they do this, or threaten to do this, in North Carolina too?

~~~
KWD
If I recall correctly, New York was the first to do this. There have been
other states to follow, including North Carolina. I believe California is also
looking at this type of legislation.

~~~
hga
And Rhode Island. New York is the only state where they haven't (yet) shut
down their Associates program, perhaps because of the size of the media
industry in the state, perhaps because it's such a big state.

With California looking to be next, we might see if the latter consideration
is the dominant one.

------
aresant
FYI - this is ALSO about to happen with California - there is still time to
write local politicians here!

[http://www.theatlantic.com/personal/archive/2010/02/californ...](http://www.theatlantic.com/personal/archive/2010/02/california-
faces-off-with-amazon/36325/)

------
jcnnghm
If this is hurting you, you should contact your representatives and complain.
They generally do listen to their constituents.

On Thanksgiving day two years ago I got a call on my cell phone from my
representative about the repeal effort for the recently passed "sales" tax on
technology services in the state of Maryland. I had sent an email the evening
before, and he asked for some more information and wanted to know if I was
willing to allow him to use the information I had given in the repeal process.
This was notable for several reasons, the speed of the response, the fact that
he personally called on Thanksgiving day, and the fact that the tax was
repealed through his efforts.

~~~
dandelany
I couldn't agree more. Here are the two sponsors of the bill:

[http://www.state.co.us/gov_dir/leg_dir/House/members/Hou11.h...](http://www.state.co.us/gov_dir/leg_dir/House/members/Hou11.htm)

<http://www.senrollieheath.com/>

If you live in Colorado, contact them and let them know what you think.

------
DanielBMarkham
Damn. That sucks.

This is like when the states do "insurance reform" -- and drive most insurers
from doing business in the states. Colorado wants "online retail reform" so it
kills all Amazon affiliate businesses based in Colorado.

What happens with insurance is that whoever is left has less competition and
the rates go up. I imagine, extrapolating, that associates in states without
these restrictions should stand to do very well in the future.

Was there any indication from Amazon beforehand that this was going to happen?

~~~
joshkaufman
Absolutely nothing - the e-mail hit my inbox at 1:08am this morning.

Seriously considering my options - it's interesting to note that the hundreds
of Amazon affiliate links on my website are still working - I'm just not being
credited for the sales, or compensated for the referrals.

I've been a huge fan of Amazon until today. It seems their strategy is to get
Associates to pressure the CO legislature to change the law, but hitting
Associates in the pocketbook isn't the best approach, IMO. If they would've
said what they'd do if the legislation passed, we could've weighed in _before_
the law was passed.

~~~
aphistic
I know absolutely nothing about the laws in CO but maybe there was some legal
reason they couldn't come out and say that beforehand? Maybe it could have
been taken as some form of blackmail, "If you sign this we'll do this really
bad thing to you".

I have no stake either way in this but as an outside observer I think Amazon
did the right thing. If more states try to make the internet money grab like
CO did (as I know more than one state is doing, including my own) they'll see
that instead of more "revenues" they'll just be hurting e-commerce in their
state and making their constituents unhappy.

~~~
_delirium
I suspect Amazon could've notified Associates ahead of time, but declined to
do so in order to cause maximum damage to them, thus maximum outrage /
political benefit for Amazon.

------
mcantor
This is the kind of thing I picture vividly when someone says a phrase like
"cutthroat business practices."

~~~
dwwoelfel
This is the kind of thing I picture vividly when someone says a phrase like
"you can't have your cake and eat it too".

Amazon brings enormous value to states like Colorado, but the politicians only
see another slice of the economy that they want power over.

I'm glad a company is finally doing something to defend itself against this
sort of thing. If Microsoft had defended itself over the monopoly charges,
maybe they would be a little more innovative today. After all, they were
punished for doing what has made Google so beloved: giving out something for
free to drive sales to their main product.

~~~
pyre
> _Amazon brings enormous value to states like Colorado, but the politicians
> only see another slice of the economy that they want power over._

More like "balance the budget" translates to "find more things to tax, rather
than cutting spending on things we don't need" in politician-speak.

