Amazon and affiliates

Amazon recently announced that it is no longer going to compensate Colorado-based affiliates due to tax complications. An Amazon affiliate is an individual or business that refers book buyers to Amazon in exchange for a small percentage of the sale if that referred customer buys anything during that “session.”  

Unlike other affiliate programs that support longer term affiliate cookies, Amazon’s affiliate code is pretty stingy – last I checked it only rewards “same-session” purchases. In other words, if you send a customer to Amazon through your affiliate code on a Tuesday, and they buy a product from Amazon right then, you earn your commission. However, if the customer follows your affiliate link to Amazon on a Tuesday but decides instead to buy the book on Wednesday, and browses several other websites in the meantime, you do not receive that affiliate commission at all.

As if you needed another reason not to be an Amazon affiliate, Amazon is now starting to bow to the government’s taxation whims by abandoning certain state-based affiliates.

It seems that anything Amazon does nowadays causes undo concern for many authors, so I’d like to take this moment to clarify for all authors reading this who are thinking about self-publishing, or already have:  

This Affiliate situation has nothing whatsoever to do with the publication, distribution and availability of POD or self-published books on Amazon. 

Specifically, Outskirts Press books with ISBNs are distributed via and always have been, the majority featuring much more author-advantageous discounting than can be achieved with many other publishers. But those publishers are not being affected either, at least not as it relates to books being listed and sold from Amazon’s sites.  The only way a publisher or company might be affected by this would be if that publisher was directly referring readers (not writers) to Amazon for the purposes of buying something.  Affiliates advertise Amazon’s services  and in exchange for that advertising, Amazon pays affiliates a commission of session-based sales.    This is not related to the practice of distributing books at all, which for most self-publishing companies, including Outskirts Press, occurs through Ingram.

The fact that Amazon is having to adjust part of its affiliate business model just goes to show that taxes represent one of the largest complications of running a growing business. The larger you get, the more complicated the taxes become — just look at Amazon. Rather than dealing with the extra complication imposed by the new state law, Amazon decided to opt-out of that complication altogether. In fact, if one were to read between the lines of the letter Amazon sent to all its Colorado-based affiliates, they are clearly trying to ‘strong-arm’ Colorado legislature into repealing this.