Malkidian Geometry

UPDATE: I HAVE ACTUALLY READ THE NEW LAW AND HERE IS WHAT IT SAYS

Re: Termination of Amazon Associates program for California residents

Dear Amazon,

Today you announced that you will be terminating Associates accounts (your affiliate marketing program) for all California residents. The reason is that California has passed a new law requiring sales tax to be charged on online purchases. 

You said:

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. It specifically imposes the collection of taxes from consumers on sales by online retailers - including but not limited to those referred by California-based marketing affiliates like you - even if those retailers have no physical presence in the state.

We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action.

As a result, we will terminate contracts with all California residents that are participants in the Amazon Associates Program as of the date (if any) that the California law becomes effective.

Your reasoning is clear. The new law will decrease your competitive advantage against local businesses (something that local businesses have decried for years). It will also probably present some logistical issues for you, although I’m sure they’re surmountable by The World’s Largest Retailer. And of course, you would probably rather not spend money collecting and remitting sales tax to a state in which you do not reside. 

These are real issues, and the law will certainly have wide-reaching ramifications. But truthfully, the merits of the new law are immaterial to this letter. Perhaps it is good for the California economy; perhaps it is a mistake. Perhaps it will help small businesses by leveling the playing field; perhaps it will create a new burden for small businesses that maintain an online presence (such as the Massachusetts-based TopatoCo, which sells my own merchandise).

Regardless, you will now have to comply with the law whenever a California customer purchases something from you.

What has puzzled me is your response to this law. You have elected to wield a club against your own affiliates. This is like being bitten by a hornet and then kicking the cat.

I challenge you to supply the link between cause and effect. How will the new law affect affiliates, regardless of their state of residency, at all? The law concerns tax charged at the point of purchase; the Associates program is a marketing effort whereby individuals can earn commissions on referred sales. Is there an internal bookkeeping wormhole involved that we can’t see?

I am personally a member of the Associates program, although I have only earned a little from it over the years. I am, however a member of the Kindle Direct Publishing program, have used your other self-publishing tools including CreateSpace, am an Amazon Advantage publisher (selling my books through your site) and, above all else, am an author with books available on Amazon. These efforts have earned me far more than any Associates revenue.

So it is not strictly from self-interest that I say: this is dumb. What you are doing is punitive and childish. Amazon Associates are, practically by definition, bloggers, tweeters, and businesses with an online presence — that’s how they earn their commissions, by blogging, tweeting, and promoting their referral links. Perhaps you are hoping that this highly social, highly visible userbase will become your grassroots army speaking out against the law? Or do you simply wish to punish the state of California by depriving its citizens of revenue, and thus the state of income tax?

Although in your letter you decry the influence of “big-box retailers, most of which are based outside of California”, you, a Washington company, are attempting to influence California politics by manufacturing a disincentive for Californians to support the law. This is a bully tactic, it is shameful, and it is made more so by its irrelevance to the issue at hand, that of sales tax.

You certainly have the right to do whatever you like with your business. I have patronized your site for years, and will likely continue to. In fact, I just wrote an article (forthcoming in Poets & Writers, November 2011 issue) that praises you over many of your competitors in the book trade, citing the tools you have made available to help small publishers become successful. I do not wish you ill, for my own fortunes as a publisher are, for better or worse, tied to yours.

And you may certainly have reason to believe that the Associates program should be terminated — it must be expensive to run, considering that you have to pay commissions on every sale made. You lose money on the Associates program (although I’m sure that you hope it raises your overall sales, which, given your dominance in the marketplace, it may or may not still be doing), while the other programs I’ve mentioned — Kindle, CreateSpace, Advantage — more directly earn you money. I’m sure it makes economic sense to terminate the Associates program in the most populous state in the US. And again, you may do what you like with your business.

But this move is bullshit. If there truly is no alternate explanation — if terminating the Associates program truly is strictly a punitive action — then to tie it to something irrelevant and cry crocodile tears about how Mean Governor Brown is forcing your hand is bullshit. 

Sincerely,

David Malki !

UPDATE: I HAVE ACTUALLY READ THE NEW LAW AND HERE IS WHAT IT SAYS