Amazon Stops Affiliate Programs in Colorado

I haven’t done much with my reseller program with Amazon in quite a while. Back when I had illusions of grandeur (and more time), I put together links to cool products on a few of my local websites. And I’ve made some money over the years.

So today I get an e-mail from Amazon telling me they no longer are offering their affiliate program to Colorado residents because of the recently enacted HB 10-1193 (that a link to a pdf version of the bill). This new regulations intent is to increase revenue to the Colorado Department of Revenue, but it puts many who are earning a living promoting products on Amazon out of business. I’m sure other high profile companies that have similar programs will follow Amazons decision. When I say puts them out of business, it’s put them out of business promoting items on Amazon. Their is no arguing this comment.

The Colorado law basically says that if you are a company that provides an affiliate marketing program and you generate over $10,000 of income in the state, the affiliate marketer (me), is considered a legal agent for that company. So now Amazon will be required to collect sales tax and remit that to the state.

Here is the important wording to be exact:

COMMENCING MARCH 1, 2010, IF A RETAILER ENTERS INTO AN AGREEMENT WITH AN AFFILIATE UNDER WHICH THE AFFILIATE, FOR A COMMISSION OR OTHER CONSIDERATION, DIRECTLY OR INDIRECTLY REFERS POTENTIAL CUSTOMERS, WHETHER BY A LINK ON AN INTERNET WEB SITE OR OTHERWISE, TO THE RETAILER, THEN THE AFFILIATE SHALL BE PRESUMED TO HAVE SOLICITED BUSINESS ON BEHALF OF SUCH RETAILER AND SUCH RETAILER IS DEEMED TO BE DOING BUSINESS IN THIS STATE. THIS PRESUMPTION SHALL NOT APPLY UNLESS THE CUMULATIVE GROSS RECEIPTS FROM SALES BY THE RETAILER TO CUSTOMERS IN THE STATE WHO ARE REFERRED TO THE RETAILER BY ALL AFFILIATES WITH THIS TYPE OF AN AGREEMENT WITH THE RETAILER ARE IN EXCESS OF TEN THOUSAND DOLLARS DURING THE PRECEDING CALENDAR YEAR.

Here’s the quick and dirty on how affiliate marketing works, and I’ll use Amazon as the example. Amazon sells millions of products all over the world. In order for them to get free advertising of their products they offer what is called an Affiliate Program. (Here is a link to Wikipedia’s definition for more insight). This affiliate program allows me to put links on any of my sites that directs viewers of my website to Amazon in order to purchase that product. If that viewer to my website purchases that product, Amazon will share some of their profits with me. For most items it’s a very small percentage, say 5%-10%. It’s not much, but it can add up, especially if I have a website that has lots of readers and those readers act on my recommendations. For example, let’s say that I’m heavy into photography and I have a hobby website about photography. On that site, I might review or make recommendations on a particular camera that I own. If I write a review about that camera on my website, and provide a link to Amazon where you can purchase that item, and you follow that link from my website and buy that product at Amazon, I get a commission. So in essence, I am acting like a salesman for that product.

I did have plans on adding some affiliate links to books I’ve read on selling on another site I run. My thinking was that since I’ve literally read and own dozens of books on selling, I could make recommendations based on what the books target market was. Guess not.

I didn’t see this coming. I don’t pay much attention to politics anymore outside of what’s screaming at me through various media outlets. Go figure.

This really is a bad precedence for the entire Internet marketing world. I feel sorry for those individuals (many working at home moms), that are waking up today all across Colorado and finding out that a significant portion of their income was stripped away by helpless/greedy money grabbing politicians.

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

Edited to add:

I found this quote from Bill Ritters office in response to his complaint on another blog. I’m sure I’ll get one with similar rhetoric. This man is out of touch. He just doesn’t understand.

Gov. Bill Ritter issued the following statement today criticizing Amazon.com’s decision to abruptly end its financial relationship with Amazon Associate businesses in Colorado:

“Amazon has taken a disappointing – and completely unjustified – step of ending its relationship with associates. While Amazon is blaming a new state law for its action, the fact is that Amazon is simply trying to avoid compliance with Colorado law and is unfairly punishing Colorado businesses in the process.

“My office worked closely with Amazon’s affiliates and associates to modify House Bill 1193 to specifically protect small businesses, avoid job losses and provide a fair, level playing field for on-line retailers and Main Street, brick-and-mortar retail shops alike.
“Amazon’s position is unfortunate, and Coloradans certainly deserve better.”

You don’t get it . Governor Schwarzenegger vetoed a similar bill in California, and a similar bill in New York is being upheld in the courts.  Once large companies (and even smaller businesses)  find out that doing business in Colorado is an unnecessary burden that no other state requires, they’ll simply wash their hands of the whole state.

Hey Mr. Bill… Coloradoans do deserve better. I’m glad you’re leaving.