Amazon Ends Affiliate Program in California

I got the email earlier, "Notice of Contract Termination Due to Potential New California Law."

See San Francisco Business Times, "Amazon threatens to drop California associates" (via Instapundit):

Last night, California Democrats reached an agreement with Gov. Jerry Brown on a proposed state budget that, among other things, would force online retailers like Amazon.com and Overstock.com to collect sales tax in California.

Already, Amazon has made its objections clear, threatening to drop the thousands of "Amazon Associates" in California who make money by referring web users to Amazon.com to buy goods.

Pitting the wealthiest and most populous state in the union against the premier online retailing conglomerate, this is a battle of two amazons — Goliath vs. Goliath, if you will.

But caught in between are thousands of bloggers, marketers and publishers who make money through Amazon's affiliate program, called Amazon Associates. Basically, if a blogger links to Amazon products on a post and a reader ends up buying something through that link, then the blogger gets a percentage of the sale for making the "referral." Small retailers and marketers also use the Associates program.

All these people are at risk of being cut off from this revenue source should the California budget pass on Tuesday.

And it's a done deal.

At Sacramento Bee, "Brown signs tax bill; Amazon tells California affiliates it will drop them":

Amazon.com today said it will sever ties with some 10,000 affiliates in California to protest the Internet sales-tax law signed by Gov. Jerry Brown Wednesday.

The big online retailer has been threatening to cut those ties since February. In emails today to its California affiliates, Amazon called the bill "unconstitutional and counterproductive. " The bill is part of the budget package passed by the Legislature.

The affiliates are businesses and nonprofits that have Amazon links on their websites. When someone clicks through that link and buys something from Amazon, the affiliate gets a fee.

Under the bill, Amazon will have to collect sales tax on all sales to Californians.

Also at Los Angeles Times, "Amazon.com to start collecting sales taxes from California customers."

And from Amazon's email:

Hello,

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. We will send a follow-up notice to you confirming the termination date if the California law is enacted. In the event that the California law does not become effective before September 30, 2011, we withdraw this notice. As of the termination date, California residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com. Please be assured that all qualifying advertising fees earned on or before the termination date will be processed and paid in full in accordance with the regular payment schedule.

Bummer.

Great job Democrats!

Added: Astute Bloggers links. Thanks!