Next week I’m doing a WSW Launch – selling 500 spots that I expect will sell out within hours. I have an affiliate program, but I’m not going to try to get affiliates to promote this launch. There are a few reasons – and they may impact anyone doing business online.
I have an in-house affiliate program. Run by myself. Due to some acts several state legislatures are taking I no longer feel comfortable running an in-house affiliate program and am going to phase mine out and move it to an affiliate network within the next few weeks – probably Clickbank.
The reason why is that several state legislatures have passed bills making it so sales made by affiliates now must face a state sales tax. Non affiliates sales don’t get hit by this, but this bill makes it so that eventually vendors and affiliates are going to be put up against the wall if they don’t account for this tax.
I do my transactions and pay affiliates through paypal and next year paypal is going to start to report every transaction made in your account to the IRS to try to find people who aren’t reporting their income. That doesn’t bother me because I report all of my income and expenses so have no problem with that, but I’m worried that if I keep using an in-house affiliate program and use paypal to pay the affiliates then it could become a big mess, trying to account for sales taxes etc and maybe even being asked who they are etc..
I can fix any problems any of this can cause by moving to an affiliate program like Clickbank – that does all of the transactions and pays out the affiliates itself. If there are any sales tax issues or special rules some state makes Clickbank will take care of it for both the vendor and affiliate.
My plan is to set up a Clickbank affiliate program and launch a product on clickbank before the end of the year. Once I have this going I’ll contact all my affiliates about it and hope they get involved. We’ve made a ton of money over the past year on my launches and my goal is to make things even better for them – instead of paying just on the first transaction once I go to Clickbank I’ll set it up so affiliates also get recurring subscription revenue, which I haven’t been giving them.
If you are a current affiliate don’t worry about promoting this launch. I’ll have a new system set up within a month and will notify you about it. I’m just going to keep the current program going for the moment in order to track any leads that were sent in the past – so if they generate sales you’ll get commission. Will probably have past leads tracked for at least the next six months, but will be replacing the current affiliate program with a clickbank program. This announcement is my first step in phasing out the current program and moving to Clickbank.
If you run an online business you may want to think of doing something similar if you have an in-house affiliate program. I don’t think there is a real problem at the moment, but there is a clear trend emerging of states trying to find ways to tax anything moving – and that means looking at online commerce. This could eventually become a massive burden for people running in-house affiliate programs at some point in a year or two. I just want to be ahead of the curve and am always extra careful to make sure nothing I do falls into any grey zone now or in the future.