Today Governor Quinn in Illinois signed into law HB 3659 which essentially abolishes Affiliate Marketing in Illinois.
UPDATE ON THIS STORY: The law was found invalid by the Illinois Supreme Court.
It is a huge story of job loss in Illinois. Governor Quinn has spoken unequivocally that the growing, innovative, job-creating industry known as Affiliate Marketing is entirely unwelcome in Illinois. This is directly contrary to actions he took just a few weeks ago during his budget address when he announced the creation of the Illinois Innovation Council to address job growth in the tech community.
How did this happen?
Let us remember, that the reason the bill was written was to collect revenue for the State of Illinois. This bill does the opposite.
Due to the fact that out-of-state online retailers (any and all retailers and not only Amazon) can simply terminate their affiliate programs in Illinois, thus removing themselves from this bill’s grasp, no revenue will be collected. That means no revenue, lost contracts for Illinois businesses, and lost jobs in Illinois.
We need a Federal Solution!
It is entirely unfortunate that the Federal government has not acted on this issue as everyone on all sides of this issue knows that it is truly a problem that only the Federal government can solve. Unfortunately, Governor Quinn jumped the gun on this. Despite the fact that we’ve been in communication with Senator Durbin’s office who has indicated that this exact issue would be considered during this session – the Governor’s early action will make that all moot as the damage will already have been done in Illinois.
As we speak, Illinois affiliate marketers are being forced to pack up their businesses and move to another state. Through a bill which started with a lack of understanding, and finished with poor judgment – Governor Quinn has spoken unequivocally that the growing, innovative, job-creating industry known as Affiliate Marketing is entirely unwelcome in Illinois. Where we were once poised to become the “Silicon Valley” of the Midwest, we are now forced to look to other states to operate our businesses. We have confirmed that neighboring state Governors and Lt. Governors have been in direct contact in an attempt to woo Affiliate Marketers to their borders.
Who does this bill help?
Governor Quinn has instead decided to side with big-box retailers – those who destroyed main street in the first place – in an issue of “fairness”. This bill helps Walmart, Target, K-Mart etc… this bill does not help Ma and Pa Booksellers who were simply being used by the big-box retailers to put a better face on the issue. When this bill becomes a law in July of 2011, there will be no increased revenue for Ma and Pa on Main St. It also won’t lead to more people shopping on Main St. as opposed to online; and it certainly will not create more of a level playing field for Ma and Pa than there was prior to this bill. Unfortunately, the big-box retailers have fooled Ma and Pa into thinking that they are on the same side, when in fact, they never will be.
Want proof on who benefits? Hint: It isn’t Main St. Check out who is celebrating?
What about the newly minted Illinois Innovation Council?
The irony is that during his last budget address, the ink still not dry, Governor Quinn set up an Illinois Innovation Council designed to foster growth in the growing tech community of Illinois. Unfortunately, the very first thing he did was pass a bill that a) isn’t fair b) doesn’t create any revenue for Illinois and c) kills job growth in an industry that he wished to grow.
Here are two critical things that have to happen now:
- The State of Illinois Dept. of Revenue MUST set up a mechanism to track new revenue coming in from this bill on July 1st. If the Dept. of Revenue fails to do this, it will be an irresponsible lack of action – piling on to the already devastating loss of jobs in Illinois.
- The Federal government, specifically in Illinois the office of Senator Dick Durbin, must take great care in looking at this issue – as there is still time before July 1st where he can save the State of Illinois from the unfortunate actions of the Governor.
Fairness? What is fair about eliminating a whole bunch of jobs in Illinois.
Here’s how this goes:
The bill passes.
Amazon terminates affiliates.
Other merchants do the same.
Affiliate-powered businesses large and small are decimated.
No revenue is collected, Ma and Pa are still being hammered by big-box retailers, and nobody benefits.
Tell me. How is that fair?
How are they spinning this?
Here is a quote from the press release, out of the Governor’s Office that describes how “fair” it is.
“It’s a matter of fairness. Stores and businesses located in Illinois employ Illinois workers, support community programs, and, through the property, income and sales taxes they pay, allow us to provide vital public services,” said Brian Hamer, Director of Revenue. “Online merchants with affiliates in Illinois should be required to remit the same taxes.”
Unfortunately, what Mr. Hamer fails to grasp here is that the out-of-state retailers won’t simply obey the twisted logic of Illinois. They will simply stop using affiliate marketing advertising – a growing, innovative way to ADVERTISE. Furthermore – this won’t stop them from selling into Illinois at all! Consumers will just click on ads from other States, on the internet there is no concept of “States” … it’s all just out there.
What will that do for fairness ? Well, I am business in Illinois. I pay property taxes, income taxes, and a number of other taxes (it’s hard to keep up). Do I not count in this ruse ? You are harming growing industries.
Here’s another quote:
“Illinois retailers are crucial components of our state economy and our local communities. We need to ensure that those businesses are not at a disadvantage in our modern marketplace. I believe this law is an important step in leveling the playing field for Illinois businesses,” said President Cullerton.
President Cullerton – you have just put all of the affiliate marketing businesses at a decided disadvantage, so much so that we are unable to operate in Illinois. I fail to see the fairness in that.
You are correct in one thing… this is a modern marketplace. One industry, Affiliate Marketing, was a growing, thriving, job-creating industry. You have sacrificed it today for whose benefit? I assure you it is not “Main Street”. Check with the booksellers in a year or so and see how those “new jobs” are looking, or if sales have picked up. Big-box retailers will continue to destroy Main St. … this bill does nothing to stop that. If your goal was to protect Main St., you wouldn’t have sided with Big-box retailers on this issue.
If you want proof that this was really about Wal-Mart and not Main St. …. Check out this piece written by Wal-Mart. Wal-Mart welcomes Amazon and Overstock Illinois Affiliatesl
That’s pretty obvious.
I say all of this with as much respect for our elected leadership as possible. I respectfully disagree 100% with their assessment that this bill is somehow about “fairness”.
Why didn’t they want our help?
We offered the help of our entire industry to find an actual level playing field. The funny thing is – I have nothing against Main St. and they really have nothing against me. I’d love to see a Federal solution to this problem so that everyone could actually have the level playing field that is being talked about.
We offered help, we offered solutions, we even offered two bills which addressed the most obvious issues of tax avoidance (ones that didn’t harm our industry). In the end, this route was chosen and in the press release from the Governor’s Office there is not one single letter that even hints to the fact that so many businesses in Illinois are going to be harmed by this bill. I believe this to be irresponsible and extremely disrespectful to the thousands of Affiliate Marketing businesses in Illinois. Sugar coating an issue with talk of “fairness” does nothing to stop the harm done to our businesses today.
For those Affiliate Marketers in Illinois reading this… know one thing. We aren’t giving up our fight and if you want to join in you know where to look.
President/CEO ShareASale.com, Inc.