72 Kilowatts Internet Marketing

A Meaningless Repeal of the Amazon Tax?

This news sort of bled out as opposed to being screamed out, but the NY Senate did in fact appeal a goodly portion of the Amazon Tax in a bill introduced June 19th, 2008 (my birthday) and subsequently passed in a conservative controlled State Senate, 44-18.

Why wasn’t this sung from the roof tops by NY affiliates?

A few reasons.

It was snuck through the last day of the NY session, and was introduced by the rules committee, without a sponsor.  So no one except a committee was championing the idea, therefore noone was mugging for the cameras about it.

Second, there is no coupling legislation in the NY assembly, so it’s unlikely that we’ll see any movement on this thing until 2009.

I have additional info coming from Assemblywoman Susan John’s office this week, and I’ll pass it along.

Ad Disclosure for Blogging Affiliates

Looking to keep your blog above board, but still be able to promote products with sales driven content?  Easier said than done, and a real sticking point for me when I consider the ethics of blogging products simply to pass consumers through affiliate links.  And while it’s not the answer overall, I’ve found disclosurepolicy.org to be a helpful step.

Here’s their statement on why it’s important:

By disclosing the purpose of a blog, bloggers are letting readers know more about the information they’ll be reviewing. Bloggers retain the freedom to write original content, as well as select which advertisers they will represent in exchange for gifts or money. Any ethical concerns will remain where they’ve always been - on the individual level. Because it is a blogger’s freedom to select which topics will bring them payment, he/she remains responsible for his/her own reputation.

So in generating a disclosure statement, which is quick, easy, and free to do at their site, following it, and by making it easily findable on your blog, you are adding credibility to your words.  You’re letting your readers know what’s an ad, what your opinion is, and what is to the best of your knowledge, truthful.

It might seem unimportant to some affiliates, but I think it’s very important.  It’s what puts one publisher ahead of another in my book.  At the end of the day, your reputation to your advertising partners matters, and with luck and hard work, it will get you into the best programs, and hopefully make you feel better about what you do as well.

New York Internet tax takes a step back?

… or a smart step ahead?

As reported initially at 5 Star, with discussion following at Abestweb, New York seemingly took a step back, and confirmed that they look at traditional affiliate marketing as possibly being the seed to rebut having a tax nexus in New York.

However, it might be just the step back they needed in order to ensure Amazon and Overstock won’t have the entire law sued into unconstitutional oblivion. Let’s look at some statements on the new Technical Services Bulletin.

TSB-M-08(3)S, New Presumption Applicable to Definition of Sales Tax Vendor, states
that the Tax Department will deem the presumption rebutted where the seller is able to establish that the only activity of its resident representatives in New York State on behalf of the seller is placing a link on the resident representatives’ Web sites to the seller’s Web site. In addition, none of the resident representatives may engage in any solicitation activity in the state targeted at potential New York State customers on behalf of the seller.

Seemingly, this backs up the statements made in the Direct Marketing Association conference call back in late May stating that traditional affiliates, in the most sparse of circumstances, did nothing to further the presumption of nexus in New York.

Now, what exceptions are listed?

Contract condition - The contract or agreement between the seller and the resident
representative provides that the resident representative is prohibited from engaging in any
solicitation activities in New York State that refer potential customers to the seller including, but not limited to: distributing flyers, coupons, newsletters and other printed promotional materials, or electronic equivalents; verbal solicitation (e.g., in-person referrals); initiating telephone calls; and sending e-mails. In addition, if the resident representative is an organization such as a club or a non-profit group, the contract or agreement must provide that the organization will maintain on its Web site information alerting its members to the prohibition against each of the solicitation activities described above

This part gets a bit tricky again. It appears to state that a merchant must contractually bind its New York affiliates to do NOTHING aside from simple web linking. No phone calls to New Yorkers, handing out flyers and coupons, etc. Specifically as well, no email marketing.

But then they throw that “or electronic equivalent” in there. I see now we should figure out what constitutes the electronic distribution of a coupon. My hopes would be that they mean by email, but that would then be double stated in the document. Can we not have RSS feeds of our deals available? In some cases, can we even control whether an RSS feed could be made available, through the methods used by scrapers?

Further, New York goes on to request:

Proof of compliance condition - Each resident representative must submit to the seller, on an
annual basis, a signed certification stating that the resident representative has not engaged in any prohibited solicitation activities in New York State, as described above, at any time during the previous year. In addition, if the resident representative is an organization, the annual
certification must also include a statement from the resident organization certifying that its Web site includes information directed at its members alerting them to the prohibition against the solicitation activities described above. Furthermore, the certification must contain a statement alerting the representative that the certification and any information submitted with it is subject to verification and audit by the Tax Department.

This may be done electronically, it goes on to say, so it might even be able to be done at the network level, if your concern is privacy.

Another hoop for merchants to jump through to hang on to their valuable New York affiliates, if in fact, we can remain as viable with the restrictions being placed on us. And, if in fact, some of the merchants that dropped us go on to re-instate NY affiliates.

Thoughts?

NY Affiliate Legal Fund

Between myself and Mel at NYAffiliateVoice.com, a joint meeting and legal fund is being set up in order to fund a team of experts to create a strategy for NY Affiliates to deal with merchants, and approach New York State, in light of the Amazon Tax.

My post from Abestweb:

There is no immediate plan of a lawsuit filed by the group, at this point. Amazon and Overstock’s cases have been requested to be merged by the State of New York, and while I suppose we could approach it from a different angle, I PERSONALLY don’t see an immediate point.

Now, that said, any outcome is possible. Things may even change by the 28th of July.

The purpose of this fund, in my eyes, is to facilitate legal research into an amicable solution for this potentially spreading crisis. In a way, to create a good legal framework for NY affiliates to approach merchants who have, or are considering, removing them. And in the end, to be able to share that knowledge with the industry, so we won’t fail next time, and we’ll be able to, as a consolidated group, address any State that might move this way, and engage our merchant partners with a dialog that makes sense, and helps them to understand the decions they will have to make.

Hope that makes sense to you, and to everyone that might help us.

Look to your right, and you will see a donate button.  Any and all help is appreciated, and 100% of this money will be used DIRECTLY to find a solution to this problem.

You’re being watched….

Since I just finished up my post on OPM ethics, I was pleased to see NYFalcon write this in his blog yesterday:

If a program moves from an affiliate manager to another one I drop the program, especially if its an affiliate manager that likes to steal other affiliate managers programs. They are out there and I know who they are. If you can’t build up trust among other affiliate managers how in the world would I trust them. There are times when the program steps up to a better affiliate manager but thats rare.

Definitely something a merchant wants to consider as they deal with selecting an in house affiliate manager or OPM.

A Possible Solution, Courtesy Haiko de Poel

In a post at Abestweb, Haiko de Poel, Jr. did what most of us have failed to do in the last 3 months… Put forth a viable solution to keeping NY Affiliates in merchant programs, and circumventing the Amazon Tax, so to speak.

I think it needs some tweaking, but it creates an excellent framework for building a better affiliate network, as it were, in least in regards to the NY tax issue.

Please head over and read the post.

When are Talking Points Just Talking Points?

In trying to organize the NY Affiliate Meeting on July 28th, I’ve ended up speaking quite a bit to Mellie from ABW.  She is co-chair of the event, and a valuable friend and co-planner to have.

She raises an interesting question here in regards to the Performance Marketing Alliance, and how it has been some degree leveraged during the initial debates on the direction of that group, it’s validity not withstanding.

First, I would wonder if it is too late for affiliates to do anything about the tax.  We plan on having an attorney at the July 28th meeting, if just to answer questions and shed some light on what we NY affiliates might be able to do as far as incorporating elsewhere, etc.

Second, as is the case with all political things, it’s an excellent way for the PMA to start some “patriotism” and chest thumping.  It’s a very emotional issue, with difficult decisions being made (STILL!!!) by merchants, scrambling being done by NY affiliates, and most networks quietly sitting in the background watching it all happen.

So it makes great fodder for speeches and what have you.

But is it just a talking point?

It’s likely that other states (though not guaranteed) will wait for the fall out of the Amazon and Overstock Lawsuits before committing to passing similar legislation.  At the same time, you can bet that pens are flying in several state capitals, perhaps with even broader strokes, preparing to pass their own presumptive nexus ruling based on the SPECIFIC outcome of the New York State lawsuits.

So is there time?  Or do moves in other states need to be made now?  And is the PMA serious about addressing this issue..  Only time will tell as the FAB etc fleshes out.

Cafepress Late to Drop NY Affiliates

In a confounding move, Cafepress terminated NY affiliates effective July 1st, 2008.

I say confounding, because I find it unlikely that CP would not have met the nexus criteria previously, and therefore didn’t really save themselves by this move.  However, it’s possible that they didn’t meet it in the last 4 tax quarters, in which case, well, it’s just another bad break for NY affiliates.

The email didn’t specifically state their interpretation of the law, just indicating that

“Due to mounting uncertainly over these new laws we will no longer be able to support affiliates residing in the State of New York, effective July 1, 2008.”

I’d like to know what the “mounting uncertainty” is.

An Open Letter to the Affiliate Marketing Industry Leaders

Generally speaking, I would post something like this at Abestweb, but I feel in this case, because of the nature of my comments here, that wouldn’t be appropriate.  And again, in posting it here instead, it will be seen by MANY less people, and might give some people the impression that I don’t want it seen there.  That isn’t true either.

As one man, with a modest background in affiliate marketing, and without the resources, information, and full range of knowledge that many in this industry are privy to, I don’t pretend to have all the answers, nor do I even know all the right questions.  But here goes.

The time has definitely come for those that have positions of authority in this industry to check their egos at the door, and either back the PMA, or start an organization that they feel will make sense.   We can’t afford all the chest thumping that is going on presently.

With merchants setting commission levels to zero whenever they feel like it, OPMs using predatory practices to recruit and bolster their coffers and standing, affiliates casually and repetitively ignoring network and merchant terms and conditions, and networks just sitting by watching it happen, this industry is in trouble.

Yes, it’s been going on for years.

Now, however, it has been brought to the forefront by people speaking at conferences, spewing out truths, half truths, and negative spins.  We need look no further than the last Affiliate Summit, or the most recent Internet Retailer conference.

Our industry is deeply fractured, both ideologically and in organization.  Due to how some people feel about “community A”, they won’t post there.  Due to how the others feel about “community B”, they won’t endeavor to post there either.  And that list goes all the way to “community ZZ” I’m sure.

In part, that’s the nature of the internet, and has little to do with our industry in particular.  At the same time, we’ve all failed to appropriately communicate to the outside world what affiliate marketing should actually be about.  Buried in all the rants, the slanders, and the self promoting clap trap that gets penned on the net each day is a strong message.  A good core.

But it’s so far buried beneath our own self importance that no one will ever see it except ourselves.

So my request to all of you that have sway in this industry:

Lower your ego and your guard.  Lock yourselves in a virtual room or a real one.  And get this thing done.

Whether each and every affiliate, from the stay at home Mom to the Pepperjam’s of this world, realize it or not, we are all counting on you.  The NY tax was just ANOTHER in a myriad of reasons to show that this industry needs a collective voice, and a collective dialog.

We will never all be moving in the same direction, with the same set of ethics, values, and goals.  At the same time, we need to task our leaders with developing a framework for the outside world to see, and we need to do it fairly, openly, and honestly.

Now get to it.

Ethics and the OPM

As a former OPM (and if New York has their way, maybe a future one as well), I did a lot of thinking about the grave responsibility that comes with having the kind of data available to us that we did.  As what amounts to being a liaison between merchants and their affiliates, we had sales statistics, valuable keyword information, and perhaps most importantly, a list of all affiliates in a program, and the ability to contact them.

That brings up, in my mind, one of the critical ethics issues in affiliate marketing, which is ownership of data.

I heard a very popular OPM once remark, in a roundabout way, that they had used a list from one of the merchants they represented in order recruit for one of their other merchants.  I would argue that in fact that data doesn’t belong to the OPM, and therefore should NEVER, under ANY CIRCUMSTANCES, be used in such a regard.

An OPM contract should be no different than the contract of any other contractor.  Intellectual property discovered while under the auspices of that contract belongs solely and exclusively to that merchant.  I wonder how a merchant would feel if they found out their list of affiliates was being utilized to divert attention from their own programs.

Brian Littleton touches on it in their excellent pledge:

We expect that OPMs managing programs on ShareASale show due respect for the affiliates of the network and merchant program.  We expect that OPMs understand that each individual merchant program is its own entity and that OPMs should not utilize ShareASale tools to recruit  an affiliate from one program that they manage to any other program.   ShareASale goes to great lengths to protect the privacy of affiliates on our network and thus we expect OPMs to uphold that integrity.  When using the ShareASale interface, newsletters and such should be specific to the merchant program and not be utilized to recruit to other programs that are managed by the OPM or general recruitment.

He goes on to discuss keyword mining, which is a genuine and critical concern of affiliates.  It’s another set of data that I feel is too dangerous to be made known to a third party.

When I was OPMing, I did look at referal links of all transactions.  At the same time, I created no spreadsheets that contained this data, nor did I in any way let it leave the Shareasale interface.

With so many OPMs now acting as affiliates themselves, this problem becomes exponentially worse.

While SAS’s pledge to keep that information hidden for certified affiliates is a positive step toward alleviating this, I consider the vast amount of referral data that Linkshare passes on.  In it, almost every ounce of a transaction is transparent to the merchant, and therefore the OPM.  In Linkshare’s case, their protection of their merchants comes at tremendous peril to their affiliates.

This is something I’d very much like to see an industry association address, be it the Performance Marketers Alliance or otherwise. OPM ethics are rarely discussed, even at Abestweb, who is well known for their ability to uncover any potential issue that could affect the privacy or intellectual property of their affiliate members.  There have been some discussions on it their, however, normally in the form of deploring OPMs that act as affiliates as well.