I got an email from Amazon’s affiliate program (Amazon Associates) this morning with a list of changes to the terms and conditions. The most notable was that the program will be terminated for Minnesota as of July 1, 2013. This is a big deal to me since I live in Minnesota and I’m an Amazon Associate.
I’ve been a part of the affiliate program for a long time. The arrangement was simple: whenever I wrote a review of a product on Gibberish I would include a link to the product on Amazon. If someone bought that product (or anything else after clicking on my affiliate link) then I got a referral bonus.
Amazon claims a change to Minnesota’s state tax law prompted the cancellation of the program. In short, Minnesota wants Amazon to collect state sales tax. Until the federal tax law changes (and it will, probably this year), Amazon is not required to do so. The new Minnesota law states that because Amazon pays affiliates in Minnesota it is “doing business” in Minnesota, and thereby subject to the laws of collecting sales tax on Minnesota residents. Amazon’s retort is to cancel the Associates program in Minnesota.
According to a local news report, the 5200 Amazon Associates based in Minnesota contributed to $500 million in sales last year and paid $35 million in taxes.
All of that will stop in a week, and I wonder if Minnesota is going to lose more tax revenue than it gains.
I never received a ton of money doing this (especially after taxes), but it was enough to defray some of my Web site hosting costs. I also used the money, in the form of Amazon gift cards, to buy new things to review. I’ve reviewed some random, dumb stuff on this blog. Part of the reason that happened was because I was getting funds from Amazon.
There won’t be an immediate change to Gibberish. I may use Google’s AdSense program to make up the slack, but that means putting more ads on the site. I may also start doing more video-based posts, since the advertisements on YouTube return more money than the text-based ads you see here on the blog.