Earlier today I went to the state capital building in Santa Fe, New Mexico to speak out about House Bill 50, the New Mexico equivalent of the “Amazon Tax”. This is my account of the afternoon I spent in the halls of government.

On Thursday, January 28, 2010, I attended the meeting of the House Business and Industry Committee. The meeting was scheduled for 1:30pm in room 309 at the state capital building in Santa Fe. Right up front, let me say that I’m not familiar with the terminology and procedures of government committees. I apologize in advance for mangling the terminology and mean no insult by it.

It was a close call, but I made it to the meeting room on time. I was, in fact, the first person in. I thought for sure that it would be a pretty empty room, since I was alone there (except for a few staffers) just a few minutes before 1:30. Apparently, they don’t believe in starting anywhere near the posted time, however. More citizens and lobbyists filed in, but no House members showed up until 2:30. I overheard someone say that they were just late getting back from lunch. I hope that wasn’t the case.

The committee room was much like you may have seen on television, only at a much smaller scale. The committee members sat in a semi-circle facing the audience, and there was a table with a microphone in the center of the room facing them. This table was used by the authors of the bills to answer questions put forth by the committee.

The committee roster was as follows: Jim R. Trujillo (D), Eliseo Lee Alcon (D), Jose A. Campos (D), Dona G. Irwin (D), Andrew J. Barreras (D), Sandra D. Jeff (D), Vice Chair Thomas A. Garcia (D), Chairwoman Debbie A. Rodella (D), Thomas C. Taylor (Minority Floor Leader, R), Jane E. Powdrell-Culbert (R), Keith Gardner (Minority Whip, R) and Shirley A. Tyler (R). The team has a combined batting average of .351, and has won several division pennants.

House Bill 50, the Internet Sales Gross Receipts Bill, was third on the agenda. I won’t bore you with the details of the first two bills; you can read my raw notes at ABestWeb. Suffice to say, it would be nearly 4pm by the time HB50 was discussed.

The bill’s author, Representative Eleanor Chavez (D, District 13, Bernalillo County), took her seat in the center of the room, with an “expert witness” by her side. I regret that I did not make a note of the gentleman’s name. Chairwoman Rodella began the proceedings. Representative Chavez gave us an overview of the bill, and then the audience was asked for opinions.

Supporters of the bill went first – about ten in all. Each raised his or her hand, was acknowledged by the chair, and stood up to give an opinion. Each supporter gave a variation of the same message: I support this bill because I represent [a cause] and the state needs more money to support [the cause]. Not one of them spoke to the particulars of the bill itself or the impact it would have on residents of New Mexico or the businesses that the bill would affect.

Opponents of the bill went next – of which I was the only one. I made my case, that I am a small businessperson in New Mexico, and that the state would not see any additional revenue because the companies the bill seeks to affect would simply terminate their relationships with me rather than collect the sales tax. The state would not benefit, and I would lose the income that I earn working online.

For the following 45 minutes or so, I listened to the debate between the committee members and Representative Chavez and her “expert witness”. It became apparent very quickly that Rep. Chavez was merely copying the basics of the bill from New York and that neither she nor her witness were knowledgeable about the internet, affiliate marketing, taxation, or how the three are related. It was clear at the outset that three committee members were against the measure (others would follow).

Representative Keith Gardner (R) was clearly against the bill, and he had my favorite quote of the afternoon, which I’ll paraphrase here because I neglected to write it down in its entirety: the way this bill is written, wouldn’t Google also be considered to have a nexus in New Mexico because they also refer buyers to sellers?

Vice Chair Thomas Garcia (D) made another great point when he noted that the way the bill was written, simply telling Representative Campos that he bought his tie at a site online (I forget which site he named) would create a nexus. The response from the “expert witness” was that the threshold of $10,000 in the bill would take care of that, but the larger point was made: threshold or not, word of mouth was written into the bill.

In the end, it became clear that the majority of the committee members were not in favor of the bill. Representatives Gardner, Powdrell-Culbert, Taylor, Garcia, Campos, and Trujillo seem to be firmly against it. Chairwoman Rodella asked some pointed questions, but I did not get a sense that she was firmly for or against the bill. The balance of the Representatives had little or nothing to say during the proceedings.

A motion to table the bill was made by Representative Gardner and it was seconded by Representative Powdrell-Culbert. The motion was objected to by Representatives Trujillo, Campos and Alcon, but in a 7-4 vote, the objection was defeated and the bill was tabled. Again, I’m not familiar with the jargon and this was my first time watching a government body in action, so I’m probably mangling the terminology.

Several Representatives mentioned, at various times in the process, that they might support the bill but didn’t for a various reasons: it was too broad, it was too vague, or it wasn’t enforceable. Nobody seemed to be of the opinion that the redefinition of nexus was itself a bad idea, or that taxing online sales was a bad idea. A better-written bill might have passed. My opinion is that unless we have a larger affiliate industry turnout if or when this bill comes back, we could see a very different result.

I did not get any face time with any of the Representatives because once a bill has been resolved, they move on to the next order of business. There were several other bills on the agenda and I had already been there for almost three-and-a-half hours. I needed to get on the road home, as I wasn’t too keen on driving over an hour in the kind of snow we were getting yesterday.

I’ll be following up with Rebecca Madigan of the Performance Marketing Association and will post any other information I have as I get it.

I consider yesterday a win for our industry, and I’m proud to have been a part of it.

Over at the Geek Dads Weekly site, I’ve just posted a one-hour recap of Affiliate Summit West 2010, the affiliate marketing conference that I’ve just returned home from. The event was incredible – I really have no complaints about it at all, which is itself incredible. Previous Summits have always had a negative aspect or two, whether it was a problem with a fellow attendee, a problem with a session or the schedule, or overall lack of benefit to my efforts at the time (not a reflection of the quality of the show, but a statement about my own lack of discipline). This time around was pitch perfect. I made a lot of great contacts, shored up some sponsorships for Geek Dads Weekly, had a great time with every single person I met there – I’m so high on this thing I’m going to be talking about it for months (probably just in time for Summit East in New York in August).

Check out the show, I hope you find it informative and helpful – or at least entertaining!

Also, for those interested in the blog I maintained during Summit, it’s located at danielmclark.tumblr.com. Lots of good stuff there, too.

It was one year ago that I launched what was to be my greatest online achievement: Earn a Million a Day. I remember that day well…

The setting was the annual ShareASale Think Tank event. I was there, as I am now, and I was thinking about how I could share my vast, vast knowledge with the world. I was thinking about the millions of dollars I earn every day and how I could show the no-talent, unskilled, idiot masses how to do the same. I wanted to “give back” to the community. That’s how generous I am.

I decided to offer up my vast, vast knowledge to the world for the low price of… well, I don’t want to spoil the surprise. Head over to Earn a Million a Day and learn how you too can be wealthy beyond your wildest imagination. Srsly. A million. Every day. Go. I can’t be held responsible if you don’t take it upon yourself to be awesome.

According to a few sources (here, here and here), the previously discussed $11,000 fine for not disclosing relationships with companies that bloggers review or link to isn’t quite real. Good to know – let’s hope that it stays that way. This bears watching, though. If you’re in the affiliate marketing space, keep an eye on these developments and prepare yourself – and start disclosing!

It’s official: the government is in the business of fining bloggers who don’t play by their poorly defined rules of disclosure.

Back in June I wrote an article describing how the United States government was gearing up to go after bloggers that don’t disclose income or freebies from companies that they write product or service reviews about. In a nutshell, if I were to write a post extolling the virtues of Walkers Shortbread Cookies, I could be fined $11,000 for not telling my readers that the link I provided is an affiliate link and that I could earn a commission if a reader bought some cookies through that link.

I provide a disclaimer and disclosure statement on a page called Linking Practices. On that page I describe what being an affiliate marketer means and that many of the links on this site are affiliate links. That should be enough to clear me with the Federal Trade Commission, right?

Who knows??

According to a story at Mashable.com, the FTC created rules (they call them guidelines) that are so vague they’d be laughable if the fine wasn’t so extraordinarily high.

It’s eleven grand per post

This site (in its current form) is just over two years old and has 107 published posts. The vast majority don’t have any affiliate links at all, but let’s say, for the sake of the discussion, that they did. The new FTC rules say that they could fine me $11,000 per post, for a grand total of $1,177,000. That’s right, over a million dollars. I have other sites that earn more than this one. This site isn’t a moneymaker for me, it’s something that I enjoy doing and occasionally throw some affiliate links into – I haven’t earned more than a few hundred bucks on it in two years. $11,000 per post? Really?

This begs the question: are past posts subject to these rules? There are blogs with hundreds – thousands – more posts than I have. Do those blog owners need to go back and edit each post to add a disclosure? Are site-wide disclosures, like the one I use on this site, good enough?

Apparently, the FTC isn’t telling.

Fortunately – or unfortunately, as time will tell – this isn’t over. The new rules go into effect December 1st. We’ll see how it shakes out, but I have a feeling the FTC is overstepping itself this time.

This morning I remembered that Shawn Collins had started a contest on 99 Designs for a new GeekCast.fm logo. I headed over to the contest page to see what was going on with it, and was a little surprised that a winner had already been chosen (I thought the contest was going to run longer). There were 26 logo entries, and I think that the best one was picked.

A clip of GeekCast.fm's New Logo

Click on through to GeekCast.fm to see the full logo, and while you’re there, check out the latest episode of Geek Dads @ Home! This week, Joe and I talk about Ted Kennedy, Winter’s first day of school, and more. Good stuff.

Few things in the affiliate marketing industry infuriate me more than hearing someone say, for whatever reason, “I may have to go out and get a real job”. In the ongoing fight with various state legislatures, the tax scheme commonly called the “Amazon tax” seeks to use affiliates of online merchants as definitions of nexuses for said merchants. Doing so allows states to mandate the collection of sales taxes on purchases made by state residents online. That’s the super short explanation. The longer explanation is more complicated.

As an affiliate myself, I come down strongly on the side of the industry in saying that it is unfair and possibly unconstitutional to use affiliates in this way. We’re not a nexus. We’re not a “physical presence” for the companies that we drive traffic to. It is important for lawmakers to understand that they are killing small businesses and hurting families when they attempt to pass these laws. Online merchants are severing ties with affiliates in some states to avoid compliance with these bad laws while they are being fought in the courts. Some small business owners are losing their livelihoods as a result.

Nothing hurts our cause more than an affiliate who denigrates our industry by essentially calling it a hobby or flight of fancy. In an article called State may sue Web retailers published at citizen-times.com, affiliate Bobby Coggins says:

“I may have to get a real job.”

A real job? You might have to get a real job? What you’re doing is a real job! This is why the state lawmakers are able to run roughshod over our industry. This is why people like Melanie Seery are tearing their hair out trying to drum up support from affiliates, merchants and networks. This is why it’s so damn hard to get people to take us seriously.

We provide a valid, valuable service. We deserve respect. We do a real job.

Earlier this week, URL shortener tr.im shut down. Then they reopened after what they’re calling an outpouring of support from users. Sort of. Is this the service you should trust your redirection to?

Using a URL shortening service is a popular way to hide a destination, save space in a Twitter or Identi.ca message, and cloak affiliate links. It’s that last point that I want to touch on here. Affiliates should take notice of what happened with tr.im earlier this week and learn a valuable lesson.

Don’t ever trust a URL shortening service to cloak your affiliate links.

On Monday, tr.im shut down with the following announcement:

Regretfully, we here at Nambu have decided to shutdown tr.im, the first step in shutting down all of our products and services within that brand.

The owners made the announcement that tr.im would redirect links until the end of the year and that the Twitter client Nambu, one of their “products and services” referenced above, would cease development. I was a Nambu user, and by extension, a tr.im user (as tr.im is the default shortener in Nambu, a point that will demonstrate a double-standard in just a moment).

Eric Woodward replied to comments on the few blog entries made at tr.im and repeated the same lines that were used on the blog. Twitter favors bit.ly. Twitter is making it impossible for other URL shorteners to survive. The people behind bit.ly have a relationship with the folks at Twitter and it’s that insider, buddy-buddy relationship (not, as he implies, the quality of bit.ly) that makes tr.im unable to compete.

Woodward went on to say that nobody was interested in buying tr.im, even for “a token amount of money”. This will be seen as ironic shortly.

Do you see where I’m going with this?

Here is a service that has been around for about 12 months, that has shortened thousands of links, that decided to close up shop because Twitter didn’t make them the default URL shortener for users of the Twitter web interface. Now, I won’t go into the comments that I made in the various blog posts here and here, but suffice to say, I think this is flawed thinking. They based their business model on a company that itself has no business model. They complained that bit.ly was crowned the default URL shortener on the Twitter website, yet they made tr.im the default URL shortener in the Nambu Twitter client. They don’t see the double-standard. More importantly, they refuse to acknowledge that the only way to make a mark with a shortener now is to look beyond Twitter.

Woodward has gone on to say that tr.im has no interest in frames, advertising or, it seems, any other kind of monetization. It was stated that nobody was interested in buying tr.im. Well, of course not! It’s not a large service, it’s not making any money, and the owners can’t seem to understand why nobody wants it! That might be a little disingenuous. There were some offers made, and they were all turned down, ostensibly because the owners don’t want anyone to use the service to spam people with frames and advertisements.

Parse that again. The owners aren’t making any money, and they refuse to sell the service to anyone else if the intention is to make money with the service. They were, it seems, simply waiting for something to come along and buy them out. That was never going to happen, but after reading the whiny blog posts (Twitter isn’t playing fair! Whaaa!) it’s no surprise that they never understood that.

Am I being harsh? Probably, yes. The way that users of tr.im and Nambu were treated this week was pathetic. I was one of those users. I’m insulted!

Affiliates, this is a wake-up call. If you’re cloaking links on your sites, find another way to do it. Any of these URL shortening services could go away tomorrow – and what will you do? Spend a week or two rewriting thousands of links? If your affiliate efforts are blog-based, as mine are on this site, consider .htaccess redirects. They’re simple to use and make swapping out merchants a snap. PHP redirects are useful, too. Either way, you have control over your traffic and you’re not at the mercy of a third party URL shortener.

Ow.ly, bit.ly, TinyURL, su.pr, twitpwr.com… do you really want to be handing over your traffic to sites that may or may not be around next year?

Whatever you do, stop using tr.im. It probably won’t last much longer with the owners running the service like this.

Another Affiliate Summit is upon us, and for the second time this year, I’ll be missing it. It seems to be my pattern: my first time was in 2006, I missed both in 2007, went in 2008, then missed both in 2009. I guess that means I’ll be going again in 2010!

My experience with Summit has only gotten more positive each time I’ve been. My first time was East in 2006, and I was as green as green could be. I knew almost nobody, and the only real reason I attended was because it was being held in Orlando, and I was living in Orlando at the time. I had a basic expo pass and spent most of my time nervously watching people walk by. The conversations that I tried to participate in were way over my head. There was an event going on simultaneously that I helped to organize for a print-on-demand company, and that was great. In fact, that was the first time that I met Deborah Carney and Jen Goode in person – two women who have been great friends to me over the past five years or so.

When next I attended—Summit West in ‘08—I was far less nervous about the whole thing. I knew a lot more about affiliate marketing going into the event, and I knew a lot more people. Summit East in ‘08 was even better. Boston is a great city, and I was very comfortable with the entire experience.

I’m definitely making a firm commitment to attend West in January, 2010. It’s being held at the Rio again, which is fantastic because I’m familiar with the Rio, having stayed there last year. I’m not the kind of guy that feels comfortable in new situations right away, so anything familiar when I travel is a plus. If you’re planning on attending, let me know, I’d love to say hello at the show.

The Federal Trade Commission wants to more tightly regulate what bloggers and website owners say on their sites about products and services. They even want to regulate how we link to other websites. Is this consumer protection or over-the-top government intervention where little is needed?

Look up in the title bar of your browser – see that? Apparently, I’m an affiliate marketer. Just in case you’re unfamiliar, an affiliate marketer simply links to products or services using a special link, and when someone buys that product or service, the affiliate marketer earns a commission. That’s the boil-it-down bottom line, although the billion-dollar industry surrounding this simple concept has evolved significantly over time by introducing variations of this basic premise.

Brian Clark of Copyblogger has written an excellent piece about the Federal Trade Commission’s new position regarding bloggers and how affiliates and other online marketers can roll with the new. While I agree with Brian’s thoughts regarding methods of disclosure, I have some conflicting thoughts and opinions regarding disclosure in general. Maybe you, dear reader, can help me sort through it.

Old Media vs. New Media

We are told that we must disclose compensation for everything on our sites. If a site runs a banner ad, it must be stated that the banner is an advertisement. If a site owner links to a product using an affiliate link, that must be disclosed. Anything that a blogger or site owner receives from any company must be disclosed if the blogger or site owner is seen to be endorsing, reviewing or affiliate linking to it.

Nowhere else in the media do you see this – not really. Go to your local bookstore. Pick up a magazine. Turn to any random advertisement. Does it say in or near the ad that the magazine has been compensated for running that ad? In the vast majority of cases, no. Turn on your television, if you still use one. Every 7 or 8 minutes, you’ll get a few minutes of advertisements – roughly 8 minutes of ad per half hour of programming. Do any of those ads specify that the network you’re watching was paid to run those ads? To the best of my knowledge, that never happens (late night infomercials excepted). Radio is the same way.

The FTC is holding internet sites to a different standard than other media if it is insisting that everything from the loftiest full-page in-depth review to the lowliest Amazon text link needs to have full disclosure. That, in and of itself, is not the problem, though. As a rule, I’m perfectly okay with having different rules for different situations.

Endorsement

The problem is that the main argument seems to be that people are too dumb to recognize that running an advertisement does not equal endorsement. When I listen to the radio and hear an ad for a service or product, I never think that the radio station endorses the product or service. When I see an ad in a magazine, it never even crosses my mind that the magazine is endorsing the product. The only thing that I, or any other rational person, should think is that the advertiser paid the appropriate sum of money to the publisher and that the ad passed the review process (to make sure the ad wasn’t inappropriate for the audience). If people don’t think of websites or blogs in the same way, that’s their problem.

What about Reviews?

What about them? On my desk, as I write this, is a copy of Mac|Life magazine – the July 2009 issue. On page 56 is a review of FileMaker Pro 10, a database application that retails for $299. The reviewer, Zack Stern, gave the software 4 out of 5 marks, or “Great”, on the Mac|Life scale.

Were this review to appear online, the FTC would require disclosure – no such disclosure is required in-article in print form. We are not told whether or not Zack Stern was given the software for free, whether he was paid to write the review (I know, that’s kind of a “duh” thing, but that’s kinda the whole point of all this) or whether he has ever been compensated by the makers of FileMaker Pro in the past. The FTC rules could require all of that, for every article online, because relationships with different companies will vary.

It may not be enough to simply put on your About page, “Sometimes we use affiliate links and sometimes we get paid to run ads, and sometimes companies give us free software to evaluate”. If it were as simple as that, people wouldn’t be freaking out over the future of the affiliate marketing industry right now. Even if having a dedicated Disclaimers and Disclosures page were good enough to satisfy the new FTC rules, would it solve anything? Would having yet another mile-long page full of legal mumbo-jumbo attached to our sites really improve matters? When was the last time you read a company’s Privacy Policy? The Terms of Service? No? Not lately?

Zack Stern wrote a review of an article for a magazine that I enjoy and trust. I could not care less if he – or more likely, the magazine – were given the software for free for the purposes of writing the review. I hope that he was compensated for his time and effort in writing the review – nobody wants to work for free, after all. What else matters?

New Media, Millions of Sources

But what about people that actually do take money in exchange for favorable reviews? Sure, there are those that will take bribes. Let’s call these things what they are – they’re bribes. They’re not “paid reviews” or “compensated posts”. They’re bribes. The problem is that it is impossible to tell when someone has taken payment for an honest favorable review or payment for a dishonest favorable review. This is where new media saves the day. With billions of blogs, social networking pages and Twitter updates that a review might appear on, it is nearly impossible for a company to control all the reviews of a product. If a blogger takes money to write a favorable review, but every other website on the planet is trashing the product… what’s the problem?

The FTC should not exist to ease the burden on the consumer to do due diligence and research when considering the purchase of a product or service.

Consumers should not assume that the first – or the tenth – thing they read about a product is the final word. People should be specifically seeking out both good and bad reviews before making a decision.

Random Linkage

I’ve been focusing on reviews because those have a far greater potential for abuse – but the FTC wants to regulate simple links in any context. Consider this: I mentioned Mac|Life magazine a little while ago. The only reason I haven’t linked out to it with an affiliate link is that I’ve got a three-year-old fighting for my attention and I’m not part of any affiliate programs that include that magazine. It’s a time and effort issue. If I had linked to it with an affiliate link, though, it wouldn’t have been part of any review. It wouldn’t have been part of any commentary about the magazine itself – in fact, I could have randomly picked any magazine that I happen to have laying around in order to make my point. There would be no endorsement other than the implied endorsement that comes with the fact that I own it – but that’s a bit of a stretch. According to the rationale behind the FTC rules though, I would be scrutinized.

Maybe the problem is with me.

Maybe my assumption that everything has been bought and paid for in some way is the problem. One of the earliest lessons I learned about affiliate marketing (one that has relaxed considerably in recent years) is that every outgoing link should be an affiliate link whenever possible. I fully expect that any link I click on any site will result in a commission – tangible or otherwise – for someone. I linked to Copyblogger at the top of this article, and while there are no monetary commissions in such a link, Brian benefits (um, a little… I guess…) from my link to his article, and I benefit from having my trackback listed at the end of his comments section.

There is a value of some sort in almost every link, but for some reason, the government wants us to disclose that value. I don’t see the point, in most cases.

The worst part about all this though, is that it’s not just linking practices that will arouse the suspecion of the FTC. Simply writing an article about a product or service is all it takes. If the FTC feels that something was inaccurately written about, you can be on the hook for severe penalties.

Welcome to Web 3.0.