"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.
> 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.
Sure, however if Amazon is a significant revenue stream on my website, I know and track Amazon policies. I don't track all sales law changes with my regulator.
Hence, I would assume if Amazon come to know of a regulatory policy which might affect me, I expect them to send me a warning email, and not after you close my account.
(I dont use amazon, but I think AMZN didnt do that via http://news.ycombinator.com/item?id=1176132 )
That may be true, but Amazon was obviously involved in trying to get this bill stopped, or changed. Wouldn't it have been worth Amazon's while to appeal to their Colorado associates to petition their legislators on this issue while the bill was still being considered rather than waiting until after it was already enacted?
They may be worried about political reprisals and investigations. For example, Humana faced a federal investigation when they sent out a mailer with statements that contradicted claims by Senator Baucus. (http://www.msnbc.msn.com/id/32954068/ns/politics-health_care...)
I'm sure that possible course of action occured to them and, based on the fact they didn't choose to do it, they decided it wasn't worth their while. I'm sure Amazon is looking out for Amazon, as they ought to be.
I don't track all sales law changes with my regulator.
If you break the Amazon TOS, you maybe get your account terminated, but if you break tax law, you maybe pay fines or go to jail. Don't you think you might have your attention priorities inverted?
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.
If your state government isn't responsive to its people's needs, that's a bigger problem than losing your Amazon Associates revenue.
If you want a more constructive suggestion, here's one: form a lobbying group to protect the interests of web publishers. In the 1990's there was a moratorium on sales taxes over the internet in order to protect the burgeoning ecommerce industry. I think there's a good case to be made for moratoria on taxes affecting web publishing and advertising--especially affiliate advertising--since web publishing is in a burgeoning state and needs to be allowed to grow without tax or interference so that content producers can find the right business models to serve the public interest after the decline of newspapers. (This is very handwavy but lobbyists and think tanks can come up with much more solid arguments.) This isn't necessarily the greatest idea, but that's how the system works nowadays and we need to get with it.
Colorado Gov. Bill Ritter said, "Amazon has taken a disappointing, and completely unjustified, step. Amazon is simply trying to avoid compliance with Colorado law."
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.)
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.
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).
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:
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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.
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...
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.
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:
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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.
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).
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.
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.
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.
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?
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.
The passage of the internet sales tax means that any sales by Amazon associates inside the state would need to charge sales tax, so if they wanted to avoid the tax, they didn't have much choice but kill the program.
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.
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.
If you view the transaction as a Colorodo affiliate selling in Colorado, it's not interstate commerce, and Colorado can tax it. Amazon fired Colorado affiliates to avoid being taken to court.
Depending on your income, you might want to check into incorporating out of state and using a mailbox service. Perhaps you could write Amazon and tell them that due to their new policy you decided to move operations.
Not sure that this is a great strategy, but I'd be looking into it today if I were you.
We also received a similar email this morning from Amazon. Our eggs are not all in one basket, but they were definitely weighted that way. Lesson Learned!
We mostly use Amazon's webservices for price comparisons on a book site, but it's interesting to note they left our AStores up and running, but obviously we won't generate any money from them....
No warnings from Amazon, no - at least, not that I saw. It was totally out of the blue. We, too, do not really depend on revenue from that source, so we can be somewhat amused by the whole thing. But it's a severe warning for anybody wanting to build a business on somebody else's foundation; you never really know if it will vanish tomorrow.
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.
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.