Is Government Going To Kill All Affiliate Marketing?

I just got this email from


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,, MYHABIT.COM or 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.

You are receiving this email because our records indicate that you are a resident of California. If you are not currently a resident of California, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state in the near future please contact us for reinstatement into the Amazon Associates Program.

To avoid confusion, we would like to clarify that this development will only impact our ability to offer the Associates Program to California residents and will not affect their ability to purchase from,, MYHABIT.COM or

We have enjoyed working with you and other California-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to California residents. We are also working on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.


The Amazon Associates Team

OK, does anyone else besides me think this is absolutely insane??  Not that Amazon would choose to terminate all California affiliates, but that the government would entertain legislation like this???

Perhaps I’m missing something as I am almost rabidly non-political, but if the largest affiliate networks like Amazon, eBay, and Commission Junction terminate affiliates in states that pass this kind of legislation, then won’t revenues DROP dramatically, resulting in LESS sales tax revenue to be collected??

PLUS, say I was generating $200k/year with one of these affiliate networks.  I now lose all that income, which means I also don’t pay INCOME TAX on it!

I fail to see how this could be anything but a completely losing proposition for the US economy.  Online retailers lose new customers and revenue that was being previously referred, affiliates are now potentially “out of a job” and contribute to the country’s unemployment problems, and the government gets less tax money into its already-barren coffers.

Seriously.  WTF?!?!?


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