future of affiliate programs in light of recent amazon/illinois thing?

by csrpj
19 replies
for those that haven't heard: Amazon Terminates Affiliate Program In Illinois After New Tax Law

is this likely to spread to other states?
#affiliate #amazon or illinois #future #light #programs #recent #thing
  • Profile picture of the author mikeroosa
    I'm sure it will. I think it already happened in Colorado as well.
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    • Profile picture of the author csrpj
      damn this sucks. so for someone starting out working with amazon.... does it even makes sense to continue down this road?
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      • Profile picture of the author bnwebm
        Maybe. If I were a betting man though, i'd say this will be a trend that will go beyond one state. Don't be an affiliate for any single program anyway, it's counterproductive and downright risky.


        Originally Posted by csrpj View Post

        damn this sucks. so for someone starting out working with amazon.... does it even makes sense to continue down this road?
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        • Profile picture of the author JRCarson
          I was dropped in Colorado. We had just gotten our earnings up around the 5k mark last year, so it stung...for a few minutes! We set up a company in another state and swapped the links out, losing about 2 hours of sales.

          A lot of people are reluctant to even consider this, as it seems so foreign a concept. It's actually very simple and straight forward, and all above board.

          Of course, if you don't make any income from Amazon and you are in a state that has dropped affiliates, I can see how one would just not care...but Amazon works well for us and there's no way I'd roll over and take no income while Amazon and lawmakers have a pissing contest.
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          • Profile picture of the author JMcGee2010
            It has happened in New York and Colorado in the past. I've heard that a lot of states are moving to that.

            My question is this: If all 50 states decided to do that, what will Amazon do...they will loose a huge chunk of money if they terminate all affiliates.

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            • Profile picture of the author hitsintoprofits
              Originally Posted by JMcGee2010 View Post

              It has happened in New York and Colorado in the past. I've heard that a lot of states are moving to that.

              My question is this: If all 50 states decided to do that, what will Amazon do...they will loose a huge chunk of money if they terminate all affiliates.

              There are many affiliates outside the US who would love to take over all the profits ;-)
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          • Profile picture of the author skibbz
            Originally Posted by JRCarson View Post

            I was dropped in Colorado. We had just gotten our earnings up around the 5k mark last year, so it stung...for a few minutes! We set up a company in another state and swapped the links out, losing about 2 hours of sales.
            Thank god you were able to swap out links and save that 5K income, that would be a huge loss this is horrible
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  • Profile picture of the author christopher jon
    My question is this: If all 50 states decided to do that, what will Amazon do...they will loose a huge chunk of money if they terminate all affiliates.
    When it reaches the point where it effects amazons sales they will adjust their business model.

    I'm sure they already have a plan in place but it's not financially prudent to make any changes yet.

    More states will follow. Most states are struggling and looking for additional sources of revenue. It's not if, but when.
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    • Profile picture of the author AnniePot
      Originally Posted by christopher jon View Post

      More states will follow. Most states are struggling and looking for additional sources of revenue. It's not if, but when.
      As I see it, states that implement this will probably end up losing income because multiple affiliates will suffer significant drops in income and thus end up paying less income tax to the states. Pretty short sighted.
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  • Profile picture of the author csrpj
    if all state are eventually going to do this and amazon won't operate their affiliate program in the US, is pursuing this a dead-end? or is there a simple way of creating an account for a different country (even if living in the US) and changing the links on your sites?
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  • Profile picture of the author simonbuzz
    Banned
    Amazon is the easy way to make money online...but as it is getting popular I am thinking that amazon might also change their rules like other networks...and then getting a account with amazon will be very hard...
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  • Profile picture of the author Eyetrap
    Arkansas just passed this same tax on April 1st. It takes effect June 9 2011. I guess I'll change my Amazon address to another state.
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  • Profile picture of the author bitriot
    How do you check if you have been dropped? I am an amazon affiliate in Illinois however I can log in and see everything like normal.
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    • Profile picture of the author bitriot
      Furthermore, must we incorporate a new LLC (in my case) or can we just change our address in amazon's system and that is that?

      I have Amazon set up to direct deposit and I have never received mail from them so could I not theoretically just change my address to a random out of state location?

      That is what I am thinking...
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    • Profile picture of the author cheezystix2
      Originally Posted by bitriot View Post

      How do you check if you have been dropped? I am an amazon affiliate in Illinois however I can log in and see everything like normal.
      I am also in Chicago, Yesterday Morning I logged in fine.
      This morning 4/15 I saw a big banner at the top of the Earnings Page stating my account has been closed. (no reason given, but now know why)
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  • Profile picture of the author O0o0O
    Amazon really doesn't need affiliates. Their site is so huge and brings in so much monstrous income that Amazon affiliates only account for a very small percentage of their gross revenue. The vast majority of Amazon affiliates barely make a few hundred bucks a month anyway. That's peanuts compared to the hundreds of millions they make a year. Letting go of all United States affiliates will not significantly affect Amazon's revenue at all.
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    • Originally Posted by O0o0O View Post

      Amazon really doesn't need affiliates. Their site is so huge and brings in so much monstrous income that Amazon affiliates only account for a very small percentage of their gross revenue. The vast majority of Amazon affiliates barely make a few hundred bucks a month anyway. That's peanuts compared to the hundreds of millions they make a year. Letting go of all United States affiliates will not significantly affect Amazon's revenue at all.
      If all those people making 100 dollars on amazon are only getting 3 dollars per sale, that's more than 30 sales a month.

      That means they reach the 6 percent mark, and they would be selling products that are roughly 50 dollars in price.

      That's 1400 for amazon, 100 for the affiliate. If there are thousands of affiliates per state, and some who do millions to high figure millions for them, then I'd say affiliate sales are still quite a huge part of their income.
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  • Profile picture of the author Steve Faber
    I'm in Washington, where Amazon is based. In fact I'm writing this only about a mile from their HQ. Since they already have a nexus in this state, and still have their affiliate program, I'm probably safe.

    That being said, they are not one of my highest earners, although the potential is certainly there, so if they did terminate WA affiliates I wouldn't lose too much.

    I think they've axed about 5 states now, including NC.

    As far as governments being shortsighted, they see revenue drops due to the down economy, and they look for ways to recoup the lost tax revenue. The funny thing is that in many cases they are informed beforehand that many companies will simply drop their affiliate programs in the state, resulting in zero revenue for the state from that firm, but they do it anyway. In addition, they also lose the marginal income tax created from the affiliate's business earnings related to Amazon (or any other affiliate program).

    Unfortunately, many governments are not very pro-business. They fail to make the connection between business, overall wealth created, and general prosperity. Then again, perhaps they do, and would rather concentrate power in their own hands, instead of allowing the "Little Guy" a chance at economic success, and the resultant freedom that ensues.

    Tax us to prosperity??? Just how does that work, anyway?

    Just my .02.
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    • Yep, many states will do this...many will not.

      States that understand economics and the flow of money will be the states where you need to have your business headquartered...if you are concerned with Amazon.

      The thing is...tax laws will change...short sighted politicians will chase the pennies and neglect the dollars.

      And, the companies and affiliate business model will change as well.

      Like they say, the only thing certain is change. Who knows what the affiliate model will look like in 5 years...likely very different from what it is today.

      BUT, I'd bet the farm there will be affiliate opportunities, you'll just need to be prepared.
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