Back To Normal: Nintendo's YouTube Plan Sounds Like A Big Bucket Of Terrible

from the bzzzzt-wrong-again dept

A couple of weeks back, I brought you news that Nintendo had announced they were creating an affiliate program for YouTubers who wanted to use its content. This seemed like it might just be good news, coming on the heels of the gaming company putting the whack on tons of "let's play" videos that covered Nintendo games, because free promotion is something to be squandered, apparently. In that post, however, I noted that there were some serious concerns about how Nintendo would approach this and whether it would attempt to exert some kind of control over video content. It turns out I massively underestimated how badly Nintendo would screw this up. The first quote in the Kotaku post contains only a hint of the problem:

"Think of it as an affiliate program where we will be providing access to executives, information, etcetera, encouraging that group of affiliates to create content on our behalf," Nintendo of America president Reggie Fils-Aime told me when I asked him for details at E3.

Did you spot the problem? You did, didn't you? Creating an affiliate program that generates extra access to Nintendo executives and all that isn't a bad idea, but focusing on using that access specifically to get "affiliates to create content on our behalf" sounds exactly like the reputation-murdering I had worried about when it comes to the trusted YouTuber names. If you're trading access to become a Nintendo sock-puppet, best of luck keeping your fan base. But it's when the interviewer specifically asked about "let's play" videos that Nintendo showed its true colors.

"When we unveil our affiliate program it'll be clear how different entities can play," Fils-Aime said. "And likely there will be a place for the kinds of examples where you reference, like, look, 'All I want to do is capture some of the content and put it out there,' not add a lot of value. There'll be a role for that. The first thing we needed to do was make sure that the content that's out there was representative of the franchises. These are our lifeblood. These are our children. We needed to make sure that the content there was reflective of what these franchises are. The next step is working with the YouTube community to provide access to information, access to executives, to help them create world-class content, leveraging our franchises."

Note that there is no promise to actually free up all that free advertising for Nintendo in the form of "let's play" videos. All there is are a lot of maybes, might-bes, could-bes, and, oh by the way, we don't think those kind of videos actually have a whole lot of value anyway. Add on top of that a good old-fashioned dose of that Nintendo protectionism and we're right back where we started. Nintendo will allow content it likes and take down content it doesn't feel is "representative." For the YouTube personalities that have built up their reputations as game reviewers and let's-play makers, they shouldn't be touching this affiliate program with a ten-foot pole.

Filed Under: affiliates, fans, let's play, reggie fils-aime, youtube
Companies: nintendo

Illinois The First State To Throw Out Laws Making Amazon Collect Sales Tax Based On Affiliates

from the a-good-win,-but-the-battle-is-almost-over dept

Over the years, we've covered a bunch of stories about Amazon cutting off affiliates in various states. The issue was mainly that states are desperate for sales tax revenue -- and there's something of an ongoing dispute about who's responsible for paying and collecting sales tax. Technically, if you buy via "mail order" and don't pay a sales tax, you're still supposed to pay up the sales tax to your state yourself. It would appear that almost no one does this. If companies have a business "nexus" in the state, then they are supposed to be collecting the sales tax at the time of the order, and sending it on to the state. The issue here was that states passed laws (almost all of which targeted Amazon) arguing that if Amazon has affiliates in the state, that counts as having a nexus, and thus Amazon would need to start collecting the sales tax. But, an affiliate is hardly the same thing as having a physical presence in a state. As anyone who's done an affiliate program knows, all it really means is that you're agreeing to advertise for the retailer, and if any sales come through, then you get a cut. They're not employees. They're not even contractors. They're just advertisers.

In NY, Amazon sued over their law, but the lawsuit got tossed and continues to wind through the appeals process. However, in Illinois, it appears that a similar law has been struck down by the Illinois Supreme Court, who said it violated federal laws prohibiting discriminatory taxes on online sales. And make no mistake about it: this is targeted directly at online sales.

It appears that the Illinois Supreme Court recognized the real relationship between Amazon and affiliates:

But Justice Anne Burke, writing for the court's majority, questioned whether there was any substantial difference between out-of-state businesses reaching Illinois consumers through a click-through-nexus approach or through other approaches that aren't taxed.

"The click-through link makes it easier for the customer to reach the out-of-state retailer," Burke wrote. "But the link is not different in kind from advertising using promotional codes that appear, for example, in Illinois newspapers or Illinois radio broadcasts."

There is one dissent, which argues that since this isn't imposing any new taxes, just who collects them, that there is no discrimination issue here at all. Either way, all of this may be moot as there's increasing support in Congress to basically force the issue on internet companies, making them collect the sales tax for states.

Filed Under: affiliates, illinois, sales tax
Companies: amazon

Amazon Prepares For Showdown In California After Budget Includes Amazon Tax

from the how-will-this-help-california dept

Over the past couple of years, a variety of states have tried to implement "Amazon taxes," whereby they change the definition of what counts as "presence" in a state to include if a company has any affiliates. Frankly, this is ridiculous. An affiliate is really nothing more than an advertiser, and it defies common sense to claim that an advertiser counts as a direct employee of a company. Amazon has been fighting these efforts in a variety of states, but it's about to take on a big fight. Apparently, the new California budget includes a version of this Amazon Tax, and the company wasted little time sending out an email to all California Amazon associates (such as us) to let us know that it would be "terminating" the contract unless California changed its mind.

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.

As we've noted before, this is an incredibly short-sighted move by the state. They think it will bring in tax revenue, when all it actually does is kill off affiliates and drives that money elsewhere, to other states. For a state that should be friendly to the internet, considering the whole "Silicon Valley" thing, you'd think the local politicians would know better.

Filed Under: affiliates, california, taxes
Companies: amazon

Should A Company Be Liable For What Its Affiliates Do?

from the section-230? dept

We all know that there are bogus product reviews online. At times, it's difficult to take reviews seriously because of this. So, to some extent, it seems like a good thing that the FTC is apparently cracking down on bogus online reviews, as demonstrated by its decision to fine a company called Legacy Learning Systems Inc., to the tune of $250,000. Apparently, the company had an affiliate program, and those "affiliates" posted all sorts of positive reviews of the company's educational DVDs for things like "Learn and Master Guitar."

However, part of this is troubling. I have no problem with the FTC going after bogus reviews. Where it could get questionable is fining LLS for the actions of its affiliates. Lots of companies have affiliate programs, and it seems to set a dangerous precedent if the company is blamed for any actions taken by those affiliates. If the company was encouraging fake reviews or something along those lines, perhaps it would move liability back to the company, but it's not at all clear that's what happened here. Now, the FTC's press release on this is a bit vague. At one point, it suggests that the company had a special "review ad" affiliate program. If that's the case, then perhaps the company was specifically soliciting fake reviews, in which case the liability could potentially be justified. But later in the press release, the FTC seems to suggest it doesn't matter:

"Whether they advertise directly or through affiliates, companies have an obligation to ensure that the advertising for their products is not deceptive," said David Vladeck, Director of the FTC's Bureau of Consumer Protection. "Advertisers using affiliate marketers to promote their products would be wise to put in place a reasonable monitoring program to verify that those affiliates follow the principles of truth in advertising."

Perhaps our various Section 230 experts can weigh in on this, but I can't see how the above statement fits with Section 230. If the affiliates are doing deceptive practices on their own, without direct encouragement from the company, then I can't see how the company itself is liable, and I certainly can't see a legal obligation to put in place a "reasonable monitoring program." In fact, I would think that Section 230 says the exact opposite.

Once again, I have no problem with cracking down on fake reviews, but shouldn't it be the reviewers themselves who are liable for being deceptive? Blaming the company in cases where they might not know seems only likely to make the whole concept of affiliate programs too big a liability for most companies to bother offering.

Filed Under: affiliates, endorsements, ftc, liability
Companies: legacy learning systems

Facebook's 3rd Biggest Advertiser Accused Of Being Affiliate Toolbar Scam; Facebook Says It's Never Heard Of The Company

from the just-like-the-old-days... dept

There have been numerous reports lately concerning just how much money Facebook is making on ads. That's part of the reason it was able to get that otherworldly $50 billion valuation from some. However, some are noticing something fishy in the Facebook ad business. After seeing an AdAge article mention in passing that the third largest advertiser on Facebook is not a household namebrand, but rather Make-My-Baby.com. Google's spam-catcher-in-chief Matt Cutts did some digging and quickly noticed that the site appears to be a sketchy toolbar installer that tries to switch you to using Bing, and then it gets an affiliate cut of any search ads you click on going forward. Cutts also points out that the URL to tell you how to uninstall the toolbar leads to a 404 page not found -- and many folks have had difficulty uninstalling the toolbar.

Marshall Kirkpatrick, over at ReadWriteWeb, digs in deeper and wonders if anyone at Facebook or Microsoft is actually minding the store. Even if they didn't directly know this was happening, if this is really the third largest advertiser on Facebook, both of those companies had to know something was up, just based on the numbers. A company like Facebook is intimately aware of its third biggest advertiser, and if the company is really driving that much traffic to Bing, then Microsoft would surely know about it as well.

Of course, this is where the story gets more bizarre. While Microsoft's response to this story was to cut off the company, Facebook's response was to claim that the company isn't an advertiser at all, let alone the third largest advertiser on the site. So how is it that reports suggest the company is the third largest advertiser, when Facebook claims they're not an advertiser at all? The company does have a slight hedge, by saying that "any affiliates that try to push people there we would shut down." So it's possible that it was hidden through some sort of affiliate setup before Facebook caught it -- but no one seems to be revealing any of the details.

Either way, all of this sounds quite reminiscent of the old adware days, where all sorts of sketchy companies would trick people into installing software to scrape up affiliate revenue. We hadn't seen much of that lately, as many of the old players eventually got wiped out, but it's hardly a surprise that similar schemes would quickly jump up in a Facebook world, whether or not it was officially through Facebook's advertising functionality.

Filed Under: advertising, affiliates, social networks, toolbars
Companies: facebook, microsoft

Atari Wants To Work With 'Illegitimate' Sites... After Being One Of The Earlier Supporters Of 'Pre-Settlement' Deals

from the well-that's-a-turn-around dept

Reader Alan points us to an interview with an executive from Atari, where he talks about a new program to work with file sharing sites, even as they make unauthorized copies available:

With the GO affiliate program, you're intending to work with sites that host illegitimate versions of Atari games - it's rare to see a company engaging with, rather than fighting, unlicensed distribution.

Truth be told, why in the world would I ever want to go after my fans? These are people who absolutely love our classic old arcade games. I joke about the fact that it seems like every computer science student, after their first year of programming class, goes off and writes a copy of Asteroids or Missile Command or Battlezone. The web is filthy with those.

Now, instead of arming up a cadre of lawyers the smart thing to do is say, "Look, you're fans of our games, let us give you the legitimate version of the game," and then bring those affiliates into the fold by saying, "We'll actually share revenue with you." They've been running that less than optimal, if not [coughs] a little dodgy, version of Asteroids or Missile Command, so why not just run the original one, share in the revenue and still have the same appeal to the fans they want to draw to their site? And we've got the library of all our other great games that we can bring to them as well.

Now some of those quotes struck me as interesting, because as you may recall, Atari was actually one of the earliest believers in "arming up a cadre of lawyers" and having them send out pre-settlement notices. It was one of the customers of Davenport Lyons, which was the predecessor of ACS:Law in the practice, and it only backed away, when it realized how much negative publicity it was receiving for threatening people if they didn't pay up.

So it's great to see the company looking to be a lot more embracing of ways to work with sites, and recognize that these are fans, not people to be attacked, but we shouldn't forget that it initially approached the space very differently.

Filed Under: affiliates, embracing, infringement
Companies: atari

Amazon Shutting Down Colorado-Based Associates Over Sales Tax Issue

from the tax-avoidance dept

You may remember last summer that Amazon shut down its affiliate programs in North Carolina, Hawaii and Rhode Island in response to new laws being put in place in those states, which would effectively make any Amazon affiliate an "official" representative of the company in that state, thus requiring that Amazon start collecting sales tax. This followed a similar mess in New York the year before. This is really short-sighted on the part of the states, pushing for additional tax revenue (of course). But it stretches the definition of what it means to have a physical presence in a state to the point where someone who is running an ad for you (all that an affiliate really is) is treated as an employee.

It appears that some states still haven't gotten the message. Michael Long sends over the email he received from Amazon, alerting him that Colorado has now passed a similar law, meaning that no one in Colorado can be an Amazon affiliate any more. Though Amazon is being a bit disingenuous in saying "no other state has similar rules," when other states have, indeed, passed similar rules, and many others are considering similar rules as well.

Of course, this strategy does risk backfiring on Amazon, as it's effectively using its affiliates as pawns in trying to get the state government to repeal this law. The alternative, of course, is that the affiliates just jump ship to another provider.

Filed Under: affiliates, colorado, taxes
Companies: amazon

LiveJournal Accused Of Redirecting Links, Swiping Affiliate Fees

from the trust-issues dept

You may or may not remember, many years ago, that one of the "tricks" used by adware was to hijack affiliate fees. Basically, the way it would work is that the adware would watch where you were clicking, and if the URL was for an online store that had an affiliate program or affiliate link, the adware would swap in its own adware account info, allowing the adware company to collect the affiliate fees rather than the company/individual who actually earned it. Sneaky.

However, now there are some claims that popular blog/community site LiveJournal is doing the same thing itself. Shawn Tutt points us to a story claiming that LiveJournal is redirecting outbound links from users such that they appear to strip any affiliate codes and add LiveJournal's own affiliate codes to a long list of popular e-commerce sites. It's hard to think of a better way to piss off a bunch of your own users than to replace their own affiliate codes with your own. Once people started complaining about this, it looks like LiveJournal stripped out the code. Still, it does raise some really big trust questions about LiveJournal, if it thought this was a good idea in the first place.

Filed Under: affiliates, links, livejournal
Companies: livejournal

California Promises No Sales Tax Due To Affiliates To Keep Amazon/Overstock Affiliates Happy

from the someone's-been-watching dept

In the last few weeks we've seen companies like Amazon drop affiliates in a bunch of different states, due to proposals in cash-strapped state legislatures to force the online retailers to collect sales tax even if there are only affiliates in that state. Apparently, California politicians put forth a similar proposal, and following threats from Overstock to drop its local affiliates, Governor Schwarzenegger has promised that no such bill will pass (thanks Eric Goldman). It seems that the willingness for these online retailers to cut off affiliates (and the anger that creates among those affiliates) caught the attention of at least someone with power in California.

Filed Under: affiliates, california, sales tax, taxes
Companies: amazon, overstock

Amazon Cuts Off Affiliates In Hawaii And Rhode Island... Who Else Wants To Try?

from the you-might-make-them-angry dept

Last week, Amazon decided to cut off North Carolina affiliates due to proposed legislation that would have affiliates (really, advertisers) be considered as local "employees" for the sake of proving that Amazon had a business "nexus" in the state, and thus need to collect state sales tax there. It appears similar legislation is popping up across a bunch of states, and Amazon is cutting off affiliates one by one. Affiliates in both Hawaii and Rhode Island have been told that they can no longer sell via Amazon over this issue. It'll be interesting to see if any states back down. Pissing off a bunch of small business owners who make money selling products via Amazon probably isn't a particularly wise thing to do in the middle of a recession.

Filed Under: affiliates, hawaii, rhode island, sales tax
Companies: amazon