And now the bad news. Surely, you knew it was coming. There are no silver lining comes without a cloud after all. First there is taxes then there is everything else…

Our Biggest Challenge

All kidding aside, there are serious challenges facing the affiliate marketing industry in the coming year. Unless you are an affiliate that’s been living under a rock, you know about the offspring of the so-called Amazon Tax which was first enacted in New York. Since that time the states of Rhode Island, and North Carolina passed similar legislation; and California and Hawaii came within a hair’s breadth of passing their own versions but thankfully the governors of those states vetoed the legislation.  Even now, though, it is still not a dead issue in those states and we face new challenges like the current one in Colorado as well as in Vermont, Virginia, Mississippi, New Mexico, Idaho, Maine, South Carolina, Florida, Maryland, Missouri, Texas, Connecticut, Illinois, Minnesota, West Virginia, and my home state of Tennessee.

Don’t see your state listed above? Consider yourself lucky, but odds are that such a tax will be proposed in your state or a bordering state very soon. Now with the aforementioned states enacting and others looking to follow, inevitable budget crises will see it occur in more states as they do whatever it takes to raise more revenue. You, Mr. or Ms. Affiliate, are the perfect target.

The time for apathy and inaction is over. The time for getting really ticked off and acting is now!

Let me put that another way: Get off your butt. Quit thinking it’s going to go away or that there is nothing you can do. Get mad and do something about it.

This is a call to arms. I don’t care if you hate politics, if you are a Democrat, Republican, or not even old enough to vote. Your jobs are at stake in some cases. Your very livelihood, if you do this full time, is on the line every time some half-witted state representative introduces legislation in a futile attempt to raise revenue through affiliates since they see Amazon as an easy target. Monkey see, monkey do.

I’ll step off the soapbox just in time and leave it at this: It’s not an exaggeration to say that the advertising tax is a serious threat to our industry so please join me and others in doing something about it!

What exactly can you do about it?

Numerous people: including Rebecca Madigan of the Performance Marketing Association, Melanie Seery of Affiliate Advocacy, to Brian Littleton of ShareASale, have made the following list of resources and ideas available.

First, get educated. Learn more about pending bills in your state. Seek out information from organizations like the Performance Marketing Association or Affiliate Advocacy. Learn what your state laws currently are and what the threat level is in your state.

The threat level is high in every state that has a sales tax. Assume the threat level is Code Red and act like it.

Second, visit the affiliate forums like ABestWeb which has an Affiliate Tax Laws category and look for the forum on tax laws in your state. If the forum does not have an active thread on your state, start something. Let others know you want to fight this! It only takes one eager and active affiliate to spark a fire in many others.

Next, get a list of state Representatives, Senators, and other important elected officials. This is easily attainable through your local state government website. Once you have the facts, be proactive, build out your network of friends, media contacts and discussions about the harmful potential of such legislation. Most importantly reach out to you’re the fellow affiliates in your state.  If your state is not a serious threat now, it could be, so the time for organizing is now.

Be vigilant; if legislation is proposed be prepared to reach out to your representative legislators. Go to their offices, get to know their staff, send them emails and letters, make phone calls, and encourage others to do the same. Tell them your story. So many of them don’t understand the details so let them know that a real person is behind this, a real person with a real job that stands to suffer greatly if such a tax is passed.

Tell them how it will cost people their jobs. Inform them that early data is showing that the states like Rhode Island that have enacted similar legislation are showing no revenue from the tax. None!

Recently, affiliates in Colorado set a great example for the rest of us with 150 affiliates very active in the fight. Unfortunately the Colorado House just passed HB 1193 and the Senate Finance Committee moved to bring to the whole Chamber. Here is an excellent article by Scott Jangro that provides a recap of what happened in Colorado.

What a wonderful example of affiliates coming together to fight this!

Apathy is the biggest enemy to beating these taxes and saving our industry. Apathy is what keeps us home on a cold day instead of driving to a boring committee meeting at the state legislature. Apathy is what makes us think that a simple email to our legislator won’t make a difference. Apathy is what leads to the tax being passed and a slew of merchant terminations (note: Many merchants like us are taking a stand and not terminating affiliates at all, or providing support in our fight).

Beyond the Advertising Tax

After the advertising tax issues, the biggest ongoing challenge for many affiliates is the seemingly fickle nature of Google. Just because Google now operates an affiliate network doesn’t mean affiliate sites don’t still get Google Slapped.

I experienced this problem first hand. Sites that had done very well for many years suddenly disappeared from both the natural listings and paid listings in Google. In about two-thirds of the cases we encountered, the sites were doing everything right, according to Google’s own best practice standards, leaving both the affiliate and me totally bewildered and wondering what to do next. In a nutshell, their demise really, really sucked.

A quick look through the various forums provides some comfort when we find that this is not some sort of attack on review site affiliates or our industry, but rather what seems to be an all-out assault on all kinds of sites combined with the fickleness of the Google algorithm. Thankfully, in December of last year and in January of this year saw many of our affiliate sites climb out of the depths and re-emerge stronger than ever, with a few tweaks that we worked out together. We are cautiously optimistic that the changes we made will work long-term.

The Launch of New Under-Prepared Affiliate Programs

On the surface that may not seem like a challenge or threat to the industry at all, but I have noticed an explosion in affiliate programs that never should have been launched in the first place. These programs end up giving good programs, and the industry as a whole, a bad name.

Now, more than ever, I am seeing programs that are run unethically, programs with horrible trained affiliate managers if they have any managers at all. These programs seem to have a general attitude towards their affiliates that borders on downright contempt and disdain. Unfortunately, they are doing a good enough job of attracting many new affiliate marketers to their programs with their offers; to only then horribly represent our industry and leaving a bad taste in everyone’s mouth.

Often times good programs never get a chance to even work with aspiring new affiliates and the advertisers who may have launched with good if misguided intentions never give the affiliate channel a chance to grow.  We all lose as a result.

In the coming year, my hope is that more and more unethical and shady programs will be brought to light and that the industry as a whole will do more to stand up to these merchants. Maybe through adopting an industry wide set of best practices. It’s in all of our best interests to put a barrier up to the bad ones, and to educate those who genuinely want to run good programs.

Thanks for reading. It’s hard to believe that there are less than eleven months left in 2010. I know for many of you, it is shaping up to be a record year.  If we stand together we can make it a great one.

For many affiliates and affiliate programs, 2009 was another banner year as the affiliate channel continues to grow. Despite all of the economic calamities and constant new reports about rising unemployment, company failures, and global financial meltdowns, most affiliate marketers that I know were either immune to all of the noise or more likely just ignored the doom and gloom and pressed forward.

Take our program for example. Our fourth quarter affiliate sales were up 62 percent from 2008 to 2009. As I said in our recent affiliate newsletter, “Recession my butt!” Most companies are satisfied or even ecstatic with 10 percent growth year to year in a good economy, so 62 percent growth is pretty good in a “down economy.”

That sentiment was echoed by Commission Junction, LinkShare, Google Affiliate Network, and ShareASale in the recent 2010 Affiliate Industry Preview Series. All experienced phenomenal growth despite the recession.

The reason is simple. Affiliates are a resilient bunch.  In the program I manage, I never once got an email asking how the economy is affecting sales or when sales would pick back up or if there was anyone left who could afford our courses. Instead, what I got was an optimistic and excited bunch of affiliates who came up with innovate ways to generate sales despite the recession.

Affiliate marketers, as a rule, are familiar with adversity. We are used to being Google Slapped, laughed at by our friends with “real jobs,” and testing far too many ideas that never should have made it off the drawing board in the first place, often failing miserably. We are used to failure after failure in order to find the one thing that actually works.

As Pinnacle Award Affiliate of the Year finalist, Eric Nagel once told me, “I usually try ten things, nine of them fail, and I stick with the one that works.” So affiliate marketers tend to overlook a little recession with ease.

All in all, I found that our affiliates and the industry as a whole could not care less about any of the bad news coming from the television and newspapers. I have found an industry that is marching forward and leaving the worriers, naysayers, and pessimists in its dust.

Forrester Research confirms the continued potential growth of affiliate marketing expecting the industry to grow by double digits in 2010 and to become a $4 billion market by 2014. That is over a 100 percent increase over the expected 2009 numbers!

Indeed it is an exciting time to be in affiliate marketing.

This is not to say that there is not a place for caution and organized action against threats to our industry. I did say in the beginning that the industry faces many challenges in the coming year after all. I will cover those in part two, so stay tuned.

One firm that’s consistently accurate and level-headed, however, is Forrester Research. Forrester has been around for over 25 years and they’re well-respected. That’s why I found their latest blog about the coming of a new computing age of particular interest.

Forrester’s Josh Bernoff uses the recent launch of Apple’s iPad as motivation to discuss the growing problem of incompatibility between the current rash of devices (Android, iPad, iPhone, Kindle, etc.) and web connectivity. “Your site may not work right on these devices,” says Bernoff, “especially if it includes Flash or assumes mouse-based navigation. Apps that work on the iPhone don’t work on the Android. Widgets for FiOS TV don’t work anywhere else.”

Bernoff says this phenomenon is just part of the problem. In addition to device incompatibility, there seems to be more closed than open systems on the Web, no doubt for competitive reasons. Facebook’s applications, for example, only work on Facebook.

“Web marketing has grown since 1995,” says Bernoff, “based on the idea that everything is connected. Click-throughs, ad networks, analytics, search-engine optimization – it all works because the Web is standardized. Google works because the Web is standardized. Not any more. Each new device has its own ad networks, format, and technology. Each new social site has its login and many hide content from search engines.”

The result is something Forrester Research labels the “Splinternet.” The firm believes the end of the cross-platform compatibility web era is near.

Forrester offers as proof of the Splinternet’s existence the fact that technology standards once controlled by open standards bodies such as the World Wide Web Consortium (W3C) will now be controlled by platform vendors like Apple and Facebook. On the Internet, advertising and user experience side, they suggest that cookie-based customization is being replaced by profile-based customization, and that standard ad formats will now have to be customized for sites and networks that are acceptable to the new devices.

How interesting – here we thought in our multi-option digital world that we were moving towards enhanced inter-connectivity and compatibility. It turns out the opposite may be true.

But Bernoff cautions Internet marketers not to jump off a cliff just yet. Instead, he says, “choose your devices carefully – investments in one cannot be transferred easily to others if you make a mistake. Rethink analytics, links, and measurement – — they’re just becoming available in the new environments.”

Still, I can see a lot of online marketers getting palpitations and sweaty palms right now.

What makes Colorado different than other states when it comes to the so called Amazon Tax?

So my background is not politics, but with all the grassroots battles we have fought in 2009 I’ve certainly learned a lot. The thing about Colorado that I haven’t seen in any other state is the political nature of this battle. Usually the thing that hits home and reaches state legislators is that these type of advertising tax bills will cost the state jobs. They will put small business out of business. And at the end of the day the State will still not collect any revenue from the tax. That message usually hits home.

They don’t seem to hear that in Colorado. In the House they kept saying over and over, “We have a budget shortfall and we need the money”. And they just don’t seem to hear the fact that there just won’t be any money. All they have to do is look at what happened in Rhode Island. Advertisers have control over their own business decisions and we saw almost 200 terminate relationships in other states. There is no reason why they won’t terminate in Colorado.

But what we’re seeing is this very coordinated effort by the Democrats, who happen to have control, in trying to push through all their tax bills regardless of whether the tax is sustainable, enforceable, or who it will hurt. Each individual bill doesn’t really matter to them I think. That’s my entire perspective from here, after getting beat down pretty hard yesterday (laughs).

The thing that we have to remember with politicians, the thing that I’ve learned, is that they always have some sort of higher purpose beyond the bill itself that they’re trying to achieve. In Colorado’s case the fight seems very partisan. Democrats have control of the House, the Senate, and they also have control of the Governor’s office. Bill Ritter, the current Governor, announced a couple of weeks ago that he’s not going to run for re-election. Essentially he is a lame duck governor. I think what we are seeing in Colorado is a very one sided push on legislation, sort of a rush to ram every bill through just in case the Democrats lose their majority.

On top of that, for a number of the House of Representatives in both parties this will be their last session. They are hitting up against term limits so we have a lot of lame ducks on top of the Governor. Because of that there was very little negotiation in the House from either Republicans or Democrats. Unfortunately as an industry we’re just getting dinged-up in the process.

How was the affiliate turn out during the House portion of the fight against bill 1193?

We had this amazing grassroots turnout against HB 1193 (pdf). We’ve had about 150 people actively writing letters, calling their legislators, and going to visit them at their office. We had 110 people show up at the Finance Committee Hearing last week. It’s been a tremendous show of force. I believe that’s going to make a difference. That’s the main tool that we have this tremendous grassroots participation and the citizens of Colorado showing up and expressing their dissatisfaction with this bill.

I have heard some express a little bit of frustration over lack of resources and coordination right now. Can you talk to that a little bit?

Yes, well…the PMA, as an organization, is trying to manage this, and it is taking up all of our resources, so yeah, we are a bit stretched. The issue that we face is there is a lot of activity going on in the background but we’re not necessarily telling the industry about it. That decision stems from counter-efforts we’ve been seeing from the American Booksellers Association (ABA) who are pushing heavily for this bill. For example, last week during the House hearing we heard testimony from a woman, the owner of a small bookstore, who testified she was advised by the ABA.

We had a similar problem in California. There we had a bunch of affiliates reach out to the blogosphere to say,  “We need as many people as we can to show up in Sacramento.” We used the affiliate community and all the blogs in associated industries to coordinate our presence there. Sure enough, in Sacramento ABA representatives showed up (laughs). We had announced positioning in our statements on the blogs, that we’re small business, that we are not establishing nexus; we had all these very logical arguments why this law is a bad idea. The ABA went up after us with point by point counter arguments. Like they had prepped from our announcements.

So when I heard this woman mention them, I thought, “Oh no, here we are again.  They’re already watching what we’re doing.” To counter that we’ve setup a registration form on the PMA site and we’ve asked people from Colorado to register with us so we can keep in communication with everybody via email only.

It is one thing to talk to the industry, to those involved on the ground, about the status of things; but what we don’t want to do is give the opposition the tools to out-maneuver us.

How will the House amendment attempting to “exempt” electronic affiliates impact matters?

It is a unique clause (pdf) that was negotiated at the House Finance Committee hearing. On the surface it looks like it is good for affiliates but in reality that’s just not the case. Based on the amendment, the House defines an affiliate as someone who makes a public referral to an online site or a face to face referral to an online site; specifically excluding an electronic solicitation of business.

Strangely that language essentially targets groups like the Boy Scouts, PTAs organizations, and churches who have web sites that have affiliate links as a way to raise money. I’m not at all sure about the political “logic” behind that (laughs).

But here’s the reality. By the nature of the industry model an advertiser does not know if an affiliate is physically directing traffic to their web site. They have no idea if they are referring business through online advertising or via face to face interaction. Rather than take the risk, advertisers will terminate if the bill passes.

This is particularly true in Colorado because of a particular clause in HB 1193 which is very unique. It essentially says the State has the ability to subpoena out-of-state advertisers believed to have nexus, and actually says that if they fail to comply those advertisers can be arrested. Now, there is plenty question as to the constitutionality and enforceability of that clause but ultimately advertisers are risk adverse. They will not take any chance at all and will likely terminate their affiliate relationships.

The “electronic” clause does not solve anything at all. It was a political move to pacify everyone in the room.

What is the next step in the upcoming fight in the Senate? What are some of the take-aways that we can learn from the loss in the House?

For each state that this comes up in we really need to understand what the political situation is and we need to make sure that our messaging reflects what we think might be successful with the political situation. We hope that other states aren’t quite as bad as Colorado because they’re in a real political battle that has, like I mentioned, nothing to do with the reality of the bills.

The fight in the Senate might be a little easier to manage. First of all there are fewer of them, which is helpful (laughs).  Unlike the House, in the Colorado Senate there is a much lower percentage of Senators dealing with term limits, so they have re-election on their mind which is something we can leverage.

We don’t quite know what the Colorado Senate is going to do, what their next moves are, who the decision makers are going to be, or when they’re going to have testimony. So we’re in this waiting period right now. In the meantime we are leveraging the political advisors we have access to in order to determine how to approach individual legislators.

What groups is the PMA coordinating with in Colorado?

We’re working with this group of political advisors which includes a dozen or so political experts from a lot of different companies, some very large companies like Google, Yahoo, Amazon, AOL, Microsoft, and Apple. We’ve been able to work with them and synchronize lobbying efforts. And there are other associations that have to do with internet legislation that we have been working with, organizations like Internet Alliance, Tech America, and Net Choice. We are all trying to fight these bills, maybe for different reasons, but sharing our information is the most effective route.

What would you like to see from the grassroots groups that are trying to self-organize in Colorado?

The local groups are fantastic because, of course, they know who their peers are and how to reach them. It was the grassroots groups that actually found the 150 people who have been consistently participating. We’re trying to work closely with them to create tight coordination of our efforts. There are a couple of critical reasons why we need tight coordination. One is effectiveness. The more people we can get to be on message at the same time  allows us to generate the more attention. It is very easy then to get the legislators to understand what we are talking about.

The danger is that if we don’t coordinate we risk the legislators getting confused, hearing different things that are not central to our argument, and causing them to fixate on things the opposition is saying.

For example, take North Carolina. That was a state where a similar law was passed. What we saw happen was that all of the legislators on both sides of the aisle, Representative and Democrat alike, became completely fixated on Amazon. The bill became all about “get Amazon, get Amazon, get Amazon”, and there was nothing we could do to convince them that there were small businesses that were being devastated in the process.

I am concerned the same thing might happen in Colorado if we don’t stay on point, if we don’t stay with really simple messages. There are probably a hundred reasons why this law is a bad thing, but we need to stick with 2 or 3 that we think will be meaningful and will change the minds of the legislators.

OK, so what are those 2 or 3 points?

Collectively with our lobbyists we are working to figure out what the vulnerable pieces are; where the opening in the armor is, if you will. In the House we thought small business and job loss should be enough but it wasn’t. What was really frustrating was that it wasn’t even raised by the Representatives who are supposed to be against this bill. So with this next round we are trying to figure out what is the right position.

It is something we will disseminate to the group soon. If local affiliates want to be informed we encourage them to get on our email list.

What can the local small affiliate who is worried about losing their commission, their business, and maybe their livelihood do to feel that they’re not just sitting and waiting for the other shoe to drop?

With this kind of a grassroots campaign where there’s already been a big push initially, it is common for participation to diminish quickly. It’s really hard to rally people. But here we have a core group that’s really excited, that wants to keep pushing and that core group is much larger than we’ve seen in other states.

Just to give you an example, in California there are 25,000 affiliates in the state and we got about 15 people to consistently help in terms of showing up in Sacramento (laughs).  Thankfully they were a very efficient 15 folks. There are 4,200 affiliates in Colorado and we have 150 that keep pushing really hard. It’s great to see that kind of turn out.

Obviously they can write letters to the representative in their district (here is a list of Colorado Senate districts). We will be distributing letters specifically for Colorado that LinkShare helped put together.

Beyond that it is really important to coordinate the push. Our lobbyists have been speaking with Colorado Senators since Friday. They’ve worked all weekend gathering information. We will be coordinating a campaign this week specific to the Senate.

The upcoming hearing of the Senate version of HB 1193, sponsored by Senator Rollie Heath, is scheduled for Thursday, February 4th with the Senate Finance Committee which will start consideration around 9:30 a.m.  It is vital that at this hearing we have a strong turnout.

What would you like to see advertisers do in terms of supporting Colorado affiliates in this fight?

I would like to see advertisers get involved and communicate with their affiliates as well as communicate with the Colorado State legislators. Advertisers can contact Senators directly or even better, have them work through me at the PMA and we can make sure information gets to the ears of the decision makers.

Is there anything else you want to cover in terms of messaging?

We need people to hang in there and keep fighting even if they are frustrated. This is definitely one of those marathon situations. There are so many analogies: this is a football game and we are only in the third quarter (laughs). If you live in Colorado and you haven’t heard what is going on you can register on the PMA website to get on our email list so you can hear blow-by-blow what we are doing to win the fight. We just have to keep working together and leverage the tremendous grassroots participation because I think that is going to be the most effective tool we have.

I want to thank Rebecca Madigan for taking time for today’s interview.

Benjamin Palmer points out that the increased linkages and compatibilities between websites and web services is the result of open APIs. In fact, the whole social media scene is, in part, facilitated by the API. In some ways, says Palmer, “Twitter is actually only in the API business.” That’s because , as Palmer states “most of its traffic doesn’t come from anything it owns – it’s all from other apps (desktop or mobile) or through integration with other web applications”.

The reason companies offer developers open APIs is to encourage them to build third-party applications. Developers can be a product’s best friend, as Apple has proven with its iPhone. While the smartphone itself was a technological breakthrough, it wouldn’t have been nearly as popular or valuable if it weren’t for the tens of thousands of applications available through the iPhone App Store. Some developers are making a very nice living simply by bringing iPhone applications to the marketplace.

Of course, developing applications is a big business – and soliciting application ideas from the public is currently in vogue. Witness the Netflix contest to come up with an alternative that could potentially beat the Netflix movie recommendation system called Cinematch. A team of developers did just that and walked away with $1 million last September.

Application development doesn’t have to take place on such a big stage. According to Palmer, every brand can benefit from APIs in two potential ways: a marketer can use “existing APIs to make new brand experiences” or create “something that has its own open API”.

It’s legitimate to ask why a marketer would want to take the time and effort to actually create an open API. Well, think of it as another more sophisticated form of social media. If you create an open API that relates to your product, your product suddenly becomes desirable. Maybe someone will want to incorporate a feature of your product into their own application. Palmer says “…they just use yours and give you some credit. Instead of just trying to connect to other people in one direction, you make something where people are actively trying to connect to you.”

According to Palmer, it’s all about “interdependencies.” APIs leverage what the web was created for in the first place: collaboration. In the end, Palmer says, “…your brand should be trying its hardest to play well with other Internet features and, when possible, make something new that the rest of the Internet wants to play with as well.” And that’s why APIs may give marketers the biggest bang yet for their promotional bucks.

What all this boiled down to was one vote. As of today, the Colorado House of Representatives has passed HB 1193 (pdf) by a 33-32 vote. The bill was introduced on January 22nd, 2010, by Colorado State Representative John “Jack” Pommer, who is also Chair of the Appropriations Committee, and Senator Rollie Heath. If fully ratified the bill is expected to commence on March 1, 2010.

The battle now moves to the Colorado Senate. Colorado affiliates can take some hope in two indicators of that the legislature is feeling pressure from affiliate activity:

1. HB 1193 was amended to include an attempted exemption (pdf) for “electronic” affiliates. While this will not keep merchants from terminating affiliates simply for fear of complying with nexus issues, a stance which Representative Pommer likened to “extortion”; it does indicate that small business in Colorado will be hurt if this bill passes.
2. One Democrat voted against party lines against the bill. Considering the type of pressure Colorado is in to finding additional revenue resources, for a representative to vote non-partisan, especially when that party is the one who sponsored the bill, is indicative that the pressure being applied  is starting to work.

It is time to ramp up  that pressure in the Senate.

To find out more about HB 1193 visit either the Performance Marketing Association here, or Affiliate Advocacy here. Both are great resources. There is still time to impact the outcome of this legislation.

States have started looking at these bills as a way to make money for their states in times of economic and budgetary turmoil. In California, arguably the state with the most financial troubles, Governor Schwarzenegger understood the effect that this bill would have on the entrepreneurs and jobs in his state and vetoed the bill.

Last night Governor Bob McDonnell delivered the GOP response to President Barack Obama’s State of the Union Address. The full video of his response is below, but I wanted to call attention to some of his words in that response that clearly shows that he must follow Governor Schwarzenegger’s example and veto Bill 660, if it makes it to his desk. He said the following:

“Here in Virginia we face our highest unemployment rate in 25 years, and bringing new jobs and more opportunities to our citizens is the top priority of my administration. Good government policies should spur economic growth and strengthen the private sectors ability to create new jobs.”

And then Governor McDonnell followed that with the following at 1:49 in the video below and aired throughout most of the morning news broadcasts this morning:

“We must enact policies that promote entrepreneurship and innovation so America can better compete with the world. What government should not do is pile on more taxation, regulation, and litigation that kills jobs and hurt the middle class.”

Virginia Senate Bill 660 is a policy that will discourage entrepreneurship in Virginia. If enacted, the innovative entrepreneurs in the state will be dropped by the same merchants that the state hopes to obtain taxes from and the potential tax gains will be more than offset by the loss of revenue from these entrepreneurial businesses and the employees they are forced to fire.

There are many Internet marketing and advertising companies in Virgina that earn their living through Internet advertising. They do not sell merchant products, nor do they even know who their customers are. These businesses earn revenue through advertising for out-of-state merchants. Upwards of 90% or more of their revenue comes from out-of-state merchants. Large advertisers like Overstock and Amazon have already put Virginia affiliates on notice, that if this bill progresses they will stop working with these entrepreneurial companies in Virginia, like they have in EVERY state that this Internet advertising tax has been proposed. Those large advertisers are just the tip of the iceberg, many merchants will stop working with these entrepreneurial companies in Virginia, because we have seen it happen in New York and every other state where this advertising tax has been passed.

Please Governor McDonnell, we hope that you will help us ensure that this bill never reaches your desk, but if it does, please veto it. Don’t allow Virginia to enact a policy that squashes entrepreneurship and innovation in your state by piling on more taxation that will kill jobs and hurt the middle class of Virginia.

Click here to view the embedded video.

The bill was introduced on January 22nd, 2010, by Colorado State Representative John “Jack” Pommer, who is also Chair of the Appropriations Committee, and Senator Rollie Heath. If fully ratified the bill is expected to commence on March 1, 2010.

To find out more about HB 1193 visit either the Performance Marketing Association here, or Affiliate Advocacy here. Both are great resources. There is still time to impact the outcome of this legislation.

Like its distant second competitor Google, Baidu has been searching for ways to expand its profitability. Thus the appeal of tapping Rakuten’s infrastructure to create a ready-made proven ecommerce model custom built for China.

As Kentaro Hyakuno, Senior Executive Officer of Rakuten, put it, “Baidu, with its vast reach and deep user loyalty, is the perfect complement to Rakuten’s extensive experience in the online B2C sector.”

The mall, which at an estimated cost of at least the equivalent of $50 million in US dollars will be the largest of its kind in China, is scheduled to launch in the latter half of 2010 with Rakuten owning 51% and Baidu owning 49% of the venture.

The timing of this news coincides with LinkShare Symposium West which starts tomorrow, January 28 in San Francisco. With the launch of the Google Affiliate Network, LinkShare’s market space has been slipping. Being able to leverage its strong affiliate relationships in Q4 of 2010 to help back the launch of such a mall is definitely just what the doctor ordered. Conversely this has the potential of making LinkShare more appealing to US advertisers who are eager to find inroads to a Chinese audience.

According to Mark Kirschner, Chief Marketing Officer for LinkShare, the opportunity is real as “LinkShare is the affiliate marketing platform of choice for Rakuten, so everywhere they go, we go with them.”

It will be interesting to see what announcements LinkShare has in store for the industry at Symposium.

Sponsored by Colorado State Representative John “Jack” Pommer, who is also Chair of the Appropriations Committee, and Senator Rollie Heath, HB 1193 is comprised of the same DNA as the so-called Amazon Tax that was passed by New York State in 2008 and which is currently making its way through a series of legal challenges lead by Amazon. In its current incarnation Colorado’s version of the bill does not stipulate a minimum amount of revenue for nexus and  mistakenly treats affiliates as a sales force rather than as publishers  engaging in a method of advertising.

While I don’t condone the way Overstock President Jonathan E. Johnson III callously uses affiliates as bargaining chips, this type of tactic worked quite effectively in California with AB 178 which was ultimately led to a veto by California Governor Arnold  Schwarzenegger. Schwarzenegger even mentioned and appealed to Overstock directly in his reasoning prior to the veto.

In an effort to display small business solidarity and put a face to those in the affiliate industry who would be hurt by Colorado HB 1193, Brian Fox, Senior Director of Business Development at  Adperio, has organized a  meeting at the Legislative Service Building, located on corner of East 14th Avenue and Sherman St., which is directly across the street from the Capital Building. You can find more about the group on Facebook here.

To find out more about HB 1193 visit either the Performance Marketing Association here, or Affiliate Advocacy here. Both are great resources.

If you wish to contact Rep. Jack Pommer you may do so through the following: email:  jack.pommer.house@state.co.us; phone: 303-866‐2780.

If you wish to contact Senator Rollie Heath you may do so through the following: email: rollie.heath.senate@state.co.us; phone: 303-866-4872.