The latest news regarding bloggers happened in California. Affiliates of Amazon, Overstock.com (also O.co) and probably other smaller California based businesses were told, “you’re fired”.

In the article, Should the Internet Be Taxed, WebPro News shared:

On Friday [July 1, 2011], a new California state law goes into effect that will tax Internet sales through affiliate advertising. Rather than pay such taxes, online retailers like Amazon will instead shut down their affiliate programs in the state. For Amazon, that is said to come to 25,000 sites in California alone.

Amazon has told affiliates in the past that they’d have to move to another state to continue earning commissions on referrals. Overstock.com has reportedly done that before too.

Some groups representing brick and mortars feel the law should be extended on a national level, claiming the taxes take away competitive advantages from Internet retailers that don’t have a physical presence in a particular state. Consumers are able to avoid fees from purchasing from these retailers that they’d otherwise have to pay by buying in-state.

My heart goes out to these affiliates. Hopefully this issue can be resolved in an amicable way.

Today’s Lesson

I think it’s great how us bloggers can potentially make an income from our blogs. It not only covers our overhead, but can also lead to new opportunities and even self employment.

And with the economy remaining slow, every little bit helps. California law forces firing of bloggers

That said, anyone in business knows it’s not wise to put all of our eggs into one basket. Anytime we rely solely on one client for our livelihood , we set ourselves up for potential problems. If our star client dies, files bankrupty, goes out of business, hires our competitor, or ___(fill in the blank)___, our income stops. Sadly, the bills don’t.

I think there’s an important lesson to be learned here.

If we bloggers continually put our trust into one or two big named businesses, happily promoting the products/services of others, and wait with baited breath to receive our piddly commission checks, we could be setting ourselves up for disappointment and even financial ruin.

Just like when big banks and big government go down, the same can happen to us.

Trust in others is one thing, but when that trust could be broken on a moments notice, we soon realize our trust was misplaced.

Making money with a blog by using affiliate links or Google AdSense is one of the easiest routes to go, however our livelihood is in the hands of others.

Maybe it’s time we start thinking how we can do it on our own*.

What say you?

Today’s Assignment

Did you get caught up in the California tax law dilemma?

What do you think is the best way to protect ourselves from situations like this?

Care to share?

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*Watch for an upcoming article where I share how fellow bloggers are making money with their blogs as well as ideas on how to diversify.

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Look Who's Talking
  1. Jo WakeNo Gravatar says:

    Well, I am in Canada, so not sure if it will ever affect me. Not that I earn money with my blog. Blogger or Adsense, dismissed me for some unknown reason years ago and although I carry Amazon ads I have never earned anything from them.

    • Barbara SwaffordNo Gravatar says:

      Hi Jo,

      I haven’t heard about anything happening to affiliates in Canada, but one never knows. Hopefully you’ll see some coins rolling in soon. 🙂

  2. Hi Barbara,

    Yes, this is definitely a reminder of a key lesson that all serious bloggers already knew, which you mentioned… “Never put all of your eggs in one basket”.

    As bloggers, we are entrepreneurs, and as entrepreneurs, we must learn to harvest from multiple income sources, if we are not already doing such. If we only have one income source, isn’t that pretty much exactly like having a job? lol.

    I haven’t put enough thought into it, so it’s hard for me to conclude whether or not it’s morally right for California to go after bloggers like that. I will say that I don’t think it’s smart to alienate their citizens like that, who happen to make a living online. California is in a lot of financial trouble, and I don’t think that they’re going to get out of that by pushing their citizens around and giving them incentive to move out of state. Just my opinion though!

    • Barbara SwaffordNo Gravatar says:

      Hi Trey,

      You’re right. We are entrepreneurs and we should look at a variety of income streams since we never know when one (or more) can close the door on us.

  3. This is the way business works these days, particularly when it is all about making money and not building community. I worked for Amazon for years and they used to pay for book reviews, then bloggers moved in and did it for free and then the affiliates program was born. I went from making a good amount of money to going to pocket change.
    Folks my age and older are still afraid to purchase things on the internet….anything even books. Our town if full of book stores because we had such a huge population of reading seniors.
    I was not a good Entertainment Minister, so I was only worth $500 a month with no benefits….the fellow who now does nothing for the Campus Ministry program makes $3K a month and benefits because his is a good showman…..can work off the cuff – Most of the faculty don’t even know him – I taught in nearly everyone’s classes – thinking and ethics skills.
    And don’t get me started on the Conservative Christians – be hind the scenes they are cutthroat business people They are driven by numbers and money.

    I think the people have to have a great turning and move back to wanting to build people up and their communities and not drag fear into every moment of their lives. People need to educated themselves….Our city refuses to have a Wal-mart because we are dependent on sales taxes with no income tax in this state and Walmart and another store don’t pay any and for all the appearance of savings our sales taxes spent at amazon and other stores pay for Walmart employees health ins. People have to understand who is on their payroll and that includes bloggers.

    Bloggers who want to make money have to have something to sell…and they have to find customers to purchase what they are offering – the same as everyone else.

    People have to pay for the electric bill and water and garbage, just like they need to do their dishes and brush their teeth. So one has to decide what they chose to do and what is luxury – It is going to take at least a generation for folks to figure this out…but there will be lots of maneuvering and change to deal with in the meantime…Diversifying is good, but also knowing why you blog is important.
    My It Girl always gets angry with me when I pay for things on line – she says if I just hunt I will find it for free….someone is paying for that “free.”

    I want people to read what I have to say…so I am paying for the privilege to spend my time sharing my words. I have to admit I get a bit jealous when a blog like Sightline gets funded so well they can hire staff….and put out a daily newsletter – like the Huffington Post….who wants to read about what we are doing for the earth and energy when they can be dazzled by the big boys – daily ( they are funded like NPR with a pledge drive)
    Would someone pay for an online subscription to your blog?
    Right now it is so much in the marketing ability, skill and entertainment.

    Change just keeps coming and coming.
    It is just phantom money anyway – we truly have to get real.

    • Barbara SwaffordNo Gravatar says:

      Hi Patricia,

      Thank you for the great comment.

      I know what you’re saying. Some blogs are very well funded and are able to hire staff. Although I’ve never been jealous of them, I do wonder what makes their sites so much more popular than some of the great blogs I read. I’m guessing it’s a matter of who you know and where the dollars are coming from. Although many of those sites claim to be unbiased, it doesn’t take a rocket scientist to read between the lines and see how money can influence what’s shared.

  4. Kelvin KaoNo Gravatar says:

    I am in California and have been hearing about the discussions on radio. When I heard about Amazon’s decision, I thought they did such a good job. Collecting tax based on the state of the affiliate (not sure if that’s legal or not) can be done one of two ways: listing price plus a tax or listing the price after tax. If you list price and also tax, that’s a confusing user experience because the user will have to sift through different prices. If you list the after tax price with the state tax factored in, it’s less enticing because it will be higher. So, from Amazon’s perspective, I think that’s absolutely the correct decision to drop the California affiliates.

    When California consumers are charged a tax, they can either think it makes sense or be angry at the government. When California affiliates are dropped, most consumers just won’t care. There will be affiliates from other states. Some might start removing their Amazon affiliate links but I suspect that most won’t bother and the links will still work. It’s just that those particular ex-affiliates won’t get paid. Affiliates from other states will jump in and fill the void. The blogger outrage (if there is one) will not do much. Amazon won’t suffer. Good move, Amazon.

    And this shows how fast an online revenue stream can arbitrarily disappear due to government policy, company policy and other reasons. Anyone that’s really relying on online revenue has got to really diversify.

    • Barbara SwaffordNo Gravatar says:

      Hi Kelvin,

      I hear you. I’m sure other bloggers are already picking up the slack and are tapping into those Amazon payouts. I find it sad how the California affiliates are left holding the bag, however Amazon has to look out for their best interests, too.

      Yes. Diversity is the key.

  5. Being Canadian, I will watch this with great interest. Look forward to your upcoming article, Barbara.

    Thanks for being so informative. Much appreciated.

    • Barbara SwaffordNo Gravatar says:

      You’re welcome Amy,

      I’m with you. This will be an interesting story to watch. I’ll bet it’s not the last we’ll hear with regard to affiliates being “fired”.

  6. Emily SuessNo Gravatar says:

    Excellent post. I recently changed the layout of my blog at Suess’s Pieces to include both display ads from individual businesses I know and AdWords content. I also use Amazon.com affiliate links in my book reviews. I feel like diversity is the way to go. Like you said, having all your eggs in one basket and forking over total ad control to a third party doesn’t seem to be in the best interests of the blog owner.

    • Barbara SwaffordNo Gravatar says:

      Hi Emily,

      That’s smart on your part; to diversify your potential income sources and not be dependent on just one.

  7. Yes – I own a few niche sites and one of them is going to lose a fairly significant amount of income now. However, as you say, I didn’t put all my eggs in one basket and this is definitely the advice I would give to any blogger trying to make money off her blog(s).

    • Barbara SwaffordNo Gravatar says:

      Hi Vered,

      I’m sorry to hear you were affected by this ruling. But with you being such a smart blogger, I’m sure you have a plan “B” ready to put in place.

  8. In some sense our livelyhood is always in others hands and will always be so. There will always be customers to care for, suppliers to contend with, loans to be taken and all the things that go in managing a business. There is risk in everything. I think the important issue is how to manage this risk. It is a good idea to start to diversify the income streams after having good success with one method.

    • Barbara SwaffordNo Gravatar says:

      Hi Amanda,

      You’re right. Our livelihood is always in the hands of others, whether we work for someone else or are self employed. And yes, managing the risk is key.

  9. HilaryNo Gravatar says:

    Hi Barbara .. obviously things are changing – and near-monopolies will continue to grow .. but as you say there are other things we can do .. thankfully I don’t live in California .. or have Vered’s challenge right now.

    It’s been good to have your perspective and others’ views on this change ..
    … thanks – Happy 4th July – cheers Hilary

    • Barbara SwaffordNo Gravatar says:

      You’re welcome Hilary,

      Thankfully you’re not affected by this, but like you said, we can learn from others as they face change. And…if we put ourselves in their shoes, it can teach us to be more aware, too.

  10. TVidNo Gravatar says:

    Amazon & Overstocks response to the new law is the reaction that one would expect that they would take. When passing the law there law makers should have expected this.

    So what the impact of the law? It doesn’t help the local brick & mortar store at all, since people will still be able to by the same products directly from Amazon & Overstock. No the entire impact of the law is to hurt the local affiliates and in turn further damage the California economy.

    The blame for this mess clearly rests on the law makers who voted for this new tax.

    • Barbara SwaffordNo Gravatar says:

      Hi TVid,

      Good point. Although the affiliates may only be 25, 000 strong (which is a lot), those dollars won’t be funneled into the State economy any more. Like you said, it will only result in more damage to California’s suffering economy.

  11. I don’t live in CA but I’ve read a bit about this, and I’ve been seeing more and more complaints about it popping up on blogs here and there. A big complaint seems to be that Amazon sent out letters to some of its affiliates saying they’d be dropped if this law goes through. The ire of the affiliates then turned to the CA state gov; I’m not sure if it is such a huge deal to have a minor tax on internet sales? What if such a law were to be enacted nationally, would Amazon drop all of its affiliates?
    In other words, I may just be playing devil’s advocate here, but why aren’t people coming down against Amazon for its decision? This country is *not* over-taxed, contrary to some popular beliefs. We have the 2nd lowest tax rate in the industrialized “Western” world.

  12. Barbara SwaffordNo Gravatar says:

    Hi Freddy,

    It’s interesting to see who takes whose side, isn’t it? Like you, I don’t live in California either but if I did (and was a successful Amazon affiliate), I’d be upset with Amazon especially if I found out they were aware this could happen but continued to sign up new affiliates in California. I wonder, when new affiliates signed up, were they warned that this could happen?

    It would be fascinating to know the whole story as well as the time frame.

  13. Mel LifshitzNo Gravatar says:

    Bloggers are actually very effective not only in affiliate marketing but also in SEO campaigns. I can’t imagine the web without bloggers.

    • Barbara SwaffordNo Gravatar says:

      Hi Mel,

      I can’t imagine that either. In fact, it seems like every time I do a search, it’s on a blog I find the answer.

  14. susanNo Gravatar says:

    Hey I was fired in Illinois – apparently our great Governor (and boy we have had some dillies, eh?) instituted a new tax law – how creative of him – and Amazon said I could not be an affiliate any more. Ticked me off because I liked providing my readers with links to get the books I recommend. I sure wasn’t doing it for the money – haha – as I made $1.40 in one year! Oh welllllllllllll
    hugs
    suZen

  15. Barbara SwaffordNo Gravatar says:

    Hi SuZen,

    I didn’t know that happened in Illinois, too. Good thing you weren’t depending on Amazon to make a living. 8)

  16. MobimasNo Gravatar says:

    well, its good for government, but its bad for online marketer. Become an affiliate marketer is not a crime. so why should we have pay any taxes?. i really don’t understand , why they always looking for spaces to collect retribution. Though we always pay any kind of taxes that already exist.

  17. Barbara SwaffordNo Gravatar says:

    Hi Mobimas,

    Yes. For online marketers it can be a challenge and taxes are just another part of earning a living online.

  18. Don’t know about California, but online marketers are just awaiting a much harder time ahead in India, since more money is going to turn taxable to pay for the Government. In fact, many legitimate yet easy passes of income are gonna be overhauled soon.
    Check out Ron’s SEO Copywriting Tips’s awesome post.Do Long or Short Headlines Work Better?My Profile

    • Barbara SwaffordNo Gravatar says:

      Hi Ron,

      Thank you for sharing what’s ahead for bloggers in India. Apparently with so many governments facing hard times, they’re looking for any source possible from which to make money.

  19. AmaniNo Gravatar says:

    Hi Barbara,

    It is wise not to put everything in one basket. Also as a serious blogger it is wise to use paid blogging platform to secure all of our hard works. At the moment, I am currently using a free platform and scared it will suddenly disappear in the future(ie either disappear with no reason or the blogging company suddenly shut down).

  20. WisdomNo Gravatar says:

    Blogging is good i like it. Iam also thinking to launch a personal blog about discussions, but the only reason it is stopped because iam in india.

    • Barbara SwaffordNo Gravatar says:

      Hi Wisdom,

      Hopefully any issues there are in India about personal blogs will soon be resolved and you’ll be able to proceed forward.

  21. I am sorry to hear that California was not included anymore in Amazon affiliate as well as financial troubles like tax. I have read a post about getting excluded in Amazon and the writer was a member for years and had a great income from it. I hope that Amazon provide their former members some alternatives since they are not allowing them to continue their affiliation. Yeah, maybe choosing other ad alternative to replace Amazon ads seems a good choice.