Affiliate Revenue at Risk

Affiliate Revenue at Risk

To continue thinking Monetization for one more post, I thought it important to talk about a recent news item.  ”Amazon Cuts North Carolina Affiliates to Avoid Tax.”

While the Ultimate Blogging Toolkit has been a forum for much Monetization discussion (note the relative size of Monetization in the tag box to the right), it bears mentioning that like any investment strategy, diversification is an important strategy in monetizing your blog.

In “The Move to Monetization: No Google Adsense,” I recapped my unsuccessful attempt to reinstate my Adsense account after it was disabled for reasons I still can not determine.  I’m not in this situation, but IF blogging was my primary or only source of income, and IF all my eggs were in the Google basket, I’d be, well, hosed.

Many people do this with Amazon, but for those in North Carolina, the opportunity just went away.  The State of North Carolina is close to passing a law that would force companies to collect the tax if they have in-state online-marketing affiliates. As a result, Amazon has ended business relationships with marketing affiliates in North Carolina to avoid collecting sales tax in the state.

It may come as no surprise that affiliates make up a small portion of Amazon’s traffic, so this move won’t hurt much.  But it does help Amazon avoid substantial headaches in trying to manage the taxation.

As the economy continues to chug away at the bottom of its cycle, more states that need to fill budget gaps may be looking use affiliates as a way to force companies to collect a sales tax for online purchases. Amazon also has threatened to pull out of its affiliate business in California, Hawaii, Rhode Island and other states. States including Maryland, Minnesota and Tennessee have rejected similar laws.

The irony of the North Carolina direction is that they have likely reduced (not increased) state revenues by driving this commerce activity out of the state.

Protect yourself.  Evaluate your revenue model and be sure there are many sources in that model.  Adjusting one that fails is one thing.  Completely changing to a new “single source” may be devastating.

Dave