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Comment by DanielBMarkham | Hacker News Reader

Damn. That sucks.

This is like when the states do "insurance reform" -- and drive most insurers from doing business in the states. Colorado wants "online retail reform" so it kills all Amazon affiliate businesses based in Colorado.

What happens with insurance is that whoever is left has less competition and the rates go up. I imagine, extrapolating, that associates in states without these restrictions should stand to do very well in the future.

Was there any indication from Amazon beforehand that this was going to happen?

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Absolutely nothing - the e-mail hit my inbox at 1:08am this morning.

Seriously considering my options - it's interesting to note that the hundreds of Amazon affiliate links on my website are still working - I'm just not being credited for the sales, or compensated for the referrals.

I've been a huge fan of Amazon until today. It seems their strategy is to get Associates to pressure the CO legislature to change the law, but hitting Associates in the pocketbook isn't the best approach, IMO. If they would've said what they'd do if the legislation passed, we could've weighed in before the law was passed.

The passage of the internet sales tax means that any sales by Amazon associates inside the state would need to charge sales tax, so if they wanted to avoid the tax, they didn't have much choice but kill the program.

A similar law passed in North Carolina a few months ago: http://online.wsj.com/article/SB124603593605261787.html

I know absolutely nothing about the laws in CO but maybe there was some legal reason they couldn't come out and say that beforehand? Maybe it could have been taken as some form of blackmail, "If you sign this we'll do this really bad thing to you".

I have no stake either way in this but as an outside observer I think Amazon did the right thing. If more states try to make the internet money grab like CO did (as I know more than one state is doing, including my own) they'll see that instead of more "revenues" they'll just be hurting e-commerce in their state and making their constituents unhappy.

I suspect Amazon could've notified Associates ahead of time, but declined to do so in order to cause maximum damage to them, thus maximum outrage / political benefit for Amazon.

If you view the transaction as a Colorodo affiliate selling in Colorado, it's not interstate commerce, and Colorado can tax it. Amazon fired Colorado affiliates to avoid being taken to court.

Depending on your income, you might want to check into incorporating out of state and using a mailbox service. Perhaps you could write Amazon and tell them that due to their new policy you decided to move operations.

Not sure that this is a great strategy, but I'd be looking into it today if I were you.

We also received a similar email this morning from Amazon. Our eggs are not all in one basket, but they were definitely weighted that way. Lesson Learned!

We mostly use Amazon's webservices for price comparisons on a book site, but it's interesting to note they left our AStores up and running, but obviously we won't generate any money from them....

No warnings from Amazon, no - at least, not that I saw. It was totally out of the blue. We, too, do not really depend on revenue from that source, so we can be somewhat amused by the whole thing. But it's a severe warning for anybody wanting to build a business on somebody else's foundation; you never really know if it will vanish tomorrow.

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