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My fellow affiliate marketers, welcome to Part 2 of the State of Affiliate Marketing Union.  I shared some of the wonderful things that affiliate marketing has going for it, including phenomenal growth despite the recession, in my post earlier this week. I feel the state of the affiliate marketing union is strong, but faces many challenges in the coming year.

And now the bad news. Surely, you knew it was coming. There are no silver lining comes without a cloud after all. First there is taxes then there is everything else…

Our Biggest Challenge

All kidding aside, there are serious challenges facing the affiliate marketing industry in the coming year. Unless you are an affiliate that’s been living under a rock, you know about the offspring of the so-called Amazon Tax which was first enacted in New York. Since that time the states of Rhode Island, and North Carolina passed similar legislation; and California and Hawaii came within a hair’s breadth of passing their own versions but thankfully the governors of those states vetoed the legislation.  Even now, though, it is still not a dead issue in those states and we face new challenges like the current one in Colorado as well as in Vermont, Virginia, Mississippi, New Mexico, Idaho, Maine, South Carolina, Florida, Maryland, Missouri, Texas, Connecticut, Illinois, Minnesota, West Virginia, and my home state of Tennessee.

Don’t see your state listed above? Consider yourself lucky, but odds are that such a tax will be proposed in your state or a bordering state very soon. Now with the aforementioned states enacting and others looking to follow, inevitable budget crises will see it occur in more states as they do whatever it takes to raise more revenue. You, Mr. or Ms. Affiliate, are the perfect target.

The time for apathy and inaction is over. The time for getting really ticked off and acting is now!

Let me put that another way: Get off your butt. Quit thinking it’s going to go away or that there is nothing you can do. Get mad and do something about it.

This is a call to arms. I don’t care if you hate politics, if you are a Democrat, Republican, or not even old enough to vote. Your jobs are at stake in some cases. Your very livelihood, if you do this full time, is on the line every time some half-witted state representative introduces legislation in a futile attempt to raise revenue through affiliates since they see Amazon as an easy target. Monkey see, monkey do.

I’ll step off the soapbox just in time and leave it at this: It’s not an exaggeration to say that the advertising tax is a serious threat to our industry so please join me and others in doing something about it!

What exactly can you do about it?

Numerous people: including Rebecca Madigan of the Performance Marketing Association, Melanie Seery of Affiliate Advocacy, to Brian Littleton of ShareASale, have made the following list of resources and ideas available.

First, get educated. Learn more about pending bills in your state. Seek out information from organizations like the Performance Marketing Association or Affiliate Advocacy. Learn what your state laws currently are and what the threat level is in your state.

The threat level is high in every state that has a sales tax. Assume the threat level is Code Red and act like it.

Second, visit the affiliate forums like ABestWeb which has an Affiliate Tax Laws category and look for the forum on tax laws in your state. If the forum does not have an active thread on your state, start something. Let others know you want to fight this! It only takes one eager and active affiliate to spark a fire in many others.

Next, get a list of state Representatives, Senators, and other important elected officials. This is easily attainable through your local state government website. Once you have the facts, be proactive, build out your network of friends, media contacts and discussions about the harmful potential of such legislation. Most importantly reach out to you’re the fellow affiliates in your state.  If your state is not a serious threat now, it could be, so the time for organizing is now.

Be vigilant; if legislation is proposed be prepared to reach out to your representative legislators. Go to their offices, get to know their staff, send them emails and letters, make phone calls, and encourage others to do the same. Tell them your story. So many of them don’t understand the details so let them know that a real person is behind this, a real person with a real job that stands to suffer greatly if such a tax is passed.

Tell them how it will cost people their jobs. Inform them that early data is showing that the states like Rhode Island that have enacted similar legislation are showing no revenue from the tax. None!

Recently, affiliates in Colorado set a great example for the rest of us with 150 affiliates very active in the fight. Unfortunately the Colorado House just passed HB 1193 and the Senate Finance Committee moved to bring to the whole Chamber. Here is an excellent article by Scott Jangro that provides a recap of what happened in Colorado.

What a wonderful example of affiliates coming together to fight this!

Apathy is the biggest enemy to beating these taxes and saving our industry. Apathy is what keeps us home on a cold day instead of driving to a boring committee meeting at the state legislature. Apathy is what makes us think that a simple email to our legislator won’t make a difference. Apathy is what leads to the tax being passed and a slew of merchant terminations (note: Many merchants like us are taking a stand and not terminating affiliates at all, or providing support in our fight).

Beyond the Advertising Tax

After the advertising tax issues, the biggest ongoing challenge for many affiliates is the seemingly fickle nature of Google. Just because Google now operates an affiliate network doesn’t mean affiliate sites don’t still get Google Slapped.

I experienced this problem first hand. Sites that had done very well for many years suddenly disappeared from both the natural listings and paid listings in Google. In about two-thirds of the cases we encountered, the sites were doing everything right, according to Google’s own best practice standards, leaving both the affiliate and me totally bewildered and wondering what to do next. In a nutshell, their demise really, really sucked.

A quick look through the various forums provides some comfort when we find that this is not some sort of attack on review site affiliates or our industry, but rather what seems to be an all-out assault on all kinds of sites combined with the fickleness of the Google algorithm. Thankfully, in December of last year and in January of this year saw many of our affiliate sites climb out of the depths and re-emerge stronger than ever, with a few tweaks that we worked out together. We are cautiously optimistic that the changes we made will work long-term.

The Launch of New Under-Prepared Affiliate Programs

On the surface that may not seem like a challenge or threat to the industry at all, but I have noticed an explosion in affiliate programs that never should have been launched in the first place. These programs end up giving good programs, and the industry as a whole, a bad name.

Now, more than ever, I am seeing programs that are run unethically, programs with horrible trained affiliate managers if they have any managers at all. These programs seem to have a general attitude towards their affiliates that borders on downright contempt and disdain. Unfortunately, they are doing a good enough job of attracting many new affiliate marketers to their programs with their offers; to only then horribly represent our industry and leaving a bad taste in everyone’s mouth.

Often times good programs never get a chance to even work with aspiring new affiliates and the advertisers who may have launched with good if misguided intentions never give the affiliate channel a chance to grow.  We all lose as a result.

In the coming year, my hope is that more and more unethical and shady programs will be brought to light and that the industry as a whole will do more to stand up to these merchants. Maybe through adopting an industry wide set of best practices. It’s in all of our best interests to put a barrier up to the bad ones, and to educate those who genuinely want to run good programs.

Thanks for reading. It’s hard to believe that there are less than eleven months left in 2010. I know for many of you, it is shaping up to be a record year.  If we stand together we can make it a great one.

Go here to see the original:
The Way I See It: State of Affiliate Marketing Part 2

Affiliate marketing indeed is a cutthroat industry, but never in my opinion have I seen such a display of cold and calculated ruthlessness.

Under the guise of working towards stopping Colorado’s version of the so-called Amazon Tax, and in front of industry counterparts and members of the Performance Marketing Association (PMA) gathered to testify against the Senate version of HB 1193, ShopAtHome took the opportunity to flex its muscles.

Earlier Rebecca Madigan, Executive Director of the PMA, had emphasized how crucial it was for affiliates to present a cohesive front so that the negative impact such a bill would have on small business in Colorado would be readily understood by legislators.

With apparent disregard for the unity in message theme, Marc Braunstein, Co-Founder of the Belcaro Group who owns large affiliate ShopAtHome, did the industry no favors when he presented his testimony to the Senate Finance Committee.

In an unanticipated move, instead of giving testimony as to how the bill would hurt Colorado businesses, he stated in its current form he was not opposed to the legislation. Despite the fact that, according to his own figures his business might suffer a drop of 20% in revenue if the bill was passed, he assured senators that the legislation would not hurt ShopAtHome. He further stated that the intended targets of the bill, Amazon and Overstock who are expected to terminate Colorado affiliates, were of little significance to him and, that after a short educational period, advertisers would return to ShopAtHome because of their compelling model.

But Marc Braunstein didn’t stop there. He used his time on the microphone to flaunt ShopAtHome’s sales numbers, their ability to retain legal advisors to deal with such legislative matters, and even managed to suck up enough to the Senators that one suggested Marc should look into getting a binding exemption to the tax.

Now I don’t fault Marc for looking after his own business. Any shrewd business man might do so. And this is still a free country, Mr. Braunstein can use his time in a public forum as he sees fit.

I fault Marc for throwing fellow Colorado affiliates under the bus despite having no compelling reason to do so. Marc didn’t do so out of necessity, he did so because in his mind they were small and insignificant. He could have leveraged the size and obvious importance of ShopAtHome’s standing in Colorado to support his fellow affiliates. Rather his grandstanding robbed affiliates of their valuable time in front of legislators who have the power to devastatingly impact their business. He was a one man filibuster.

In an industry that is full of cutthroats it is hard to stand out. But as many affiliates in the industry said on Twitter, Marc just won the public douche bag award. I hope he’s proud.

Source:
ShopAtHome Stabs Fellow Colorado Affiliates in the Back

My fellow affiliate marketers, the state of the affiliate marketing union is strong, but faces many challenges in the coming year.

For many affiliates and affiliate programs, 2009 was another banner year as the affiliate channel continues to grow. Despite all of the economic calamities and constant new reports about rising unemployment, company failures, and global financial meltdowns, most affiliate marketers that I know were either immune to all of the noise or more likely just ignored the doom and gloom and pressed forward.

Take our program for example. Our fourth quarter affiliate sales were up 62 percent from 2008 to 2009. As I said in our recent affiliate newsletter, “Recession my butt!” Most companies are satisfied or even ecstatic with 10 percent growth year to year in a good economy, so 62 percent growth is pretty good in a “down economy.”

That sentiment was echoed by Commission Junction, LinkShare, Google Affiliate Network, and ShareASale in the recent 2010 Affiliate Industry Preview Series. All experienced phenomenal growth despite the recession.

The reason is simple. Affiliates are a resilient bunch.  In the program I manage, I never once got an email asking how the economy is affecting sales or when sales would pick back up or if there was anyone left who could afford our courses. Instead, what I got was an optimistic and excited bunch of affiliates who came up with innovate ways to generate sales despite the recession.

Affiliate marketers, as a rule, are familiar with adversity. We are used to being Google Slapped, laughed at by our friends with “real jobs,” and testing far too many ideas that never should have made it off the drawing board in the first place, often failing miserably. We are used to failure after failure in order to find the one thing that actually works.

As Pinnacle Award Affiliate of the Year finalist, Eric Nagel once told me, “I usually try ten things, nine of them fail, and I stick with the one that works.” So affiliate marketers tend to overlook a little recession with ease.

All in all, I found that our affiliates and the industry as a whole could not care less about any of the bad news coming from the television and newspapers. I have found an industry that is marching forward and leaving the worriers, naysayers, and pessimists in its dust.

Forrester Research confirms the continued potential growth of affiliate marketing expecting the industry to grow by double digits in 2010 and to become a $4 billion market by 2014. That is over a 100 percent increase over the expected 2009 numbers!

Indeed it is an exciting time to be in affiliate marketing.

This is not to say that there is not a place for caution and organized action against threats to our industry. I did say in the beginning that the industry faces many challenges in the coming year after all. I will cover those in part two, so stay tuned.

Read the original post:
The Way I See It: State of Affiliate Marketing Part 1

As a blogger and an ex-newspaper reporter I have an axe to grind with many of my peers. Please avoid the temptation to distort reality by quoting statistics and data out of context, no matter how linkbait worthy the intended headline or story angle might be.

What raised my hackles? I read this eWeek article and choked when I saw this line:

“Twitter boasted astronomical growth, up 1,170 percent from its negligible .15 percent market share from September 2008″.

I decided to check out the source, Experian Hitwise’s press release on social network traffic, and examine their report using my own calculations:

Twitter September 2009 social network market share of a whopping 1.84% is 12.26 times (or 1,226%) of it’s 0.15% September 2008 figure. This is derived by taking 1.84 divided by 0.15 (1.84/0.15).

Taking a leaf out of a grade school math book, the increase in traffic can be calculated by the following formula:

Percentage Increase = [(new figure - old figure) / old figure] * 100% which should be [(1.84-0.15)/0.15]*100% = 1,127% or an increase of 11.27 times over the previous figure.

So where did the 1,170% figure mentioned in Hitwise’s release come from? Beats me. Maybe someone was a little lax in checking their own stats.

Should we be concerned when a web measurement firm whose bread and butter comes from reporting data, reports it inaccurately? If the reported data is incorrect, how about the validity of the web data contained the report? What happens when a respected media outlet like eWeek publishes data verbatim, without running their own checks to verify accuracy provided by a newsmaker?

Quality control of data is obviously an issue.

Even more interesting is the 1,127% or 1,170% year-on-year growth figure attributed to Twitter’s growth. Everyone loves to see impressive numbers, especially if it’s in multiples of 100%.

Mark Twain popularized the phrase “There are three kinds of lies: lies, damned lies, and statistics.”

Statistics are powerful because they are viewed as logic based.  In school math was the only subject you could get a perfect score in, and that thinking has carried over into adult life. People like seeing statistics, no matter how skewed, because it makes them feel secure in the information they have been given. When delivered by a smart PR firm, marketing team, or in the media the data is often accepted without question. 

This is because most individuals (internet marketers included) are inherently bad at math and numbers in general. Whether by choice or circumstances, they just aren’t equipped to deal with data critically or intelligently.

I’ve seen more than a few isolated instances where writers cite 500% growth or 1,270% increase in profit, but does this mean anything?

Context is key if you want to make sense of data. A sales increase from $1 to $5 is an increase of 400%, and publishing an article announcing a 400% increase will get you more than your fair share of eyeballs. However, if you consider that $5 would barely pay for lunch, it’s a case where statistics, without appropriate context, can be manipulated to distort reality. What’s important when dealing with data is to look at information against the appropriate backdrop.

If your company is growing at 90%, while comparable peers in the same industry are growing at 300%, you’re lagging behind the industry. By “comparable peers” I’m referring to partners or competitors that are equivalent in size or can be mathematically adjusted to provide a meaningful basis of comparison.

Context and relevance and looking at data in a meaningful way means seeing a $1 billion revenue figure and a net profit margin of 0.5%. Or a 500% monthly sales growth figure from a baseline of $27 in sales. Do these figures mean anything? Only when they’re seen from the perspective of the big picture.

If you want to see the forest and not just the trees, don’t simply swallow the “lies, damned lies, and statistics” they are trying to spoonfeed you.

View original post here:
Are Reporters and Bloggers Guilty Of Using Weapons of Statistical Destruction?

This is a tale of two types of internet celebrities: those that fight hard to give back to their community and those that sit on the sidelines.

First, I want to give accolades to the Affiliate Marketers Give Back team who in their third straight year participated in the Avon Walk for Breast Cancer raising over $50,000 in the fight against the disease. Having taken part in the walk last year I had the pleasure of seeing firsthand the type of work team leader Missy Ward, Co-Founder of Affiliate Summit, puts in not only to raise awareness of breast cancer and fundraise for the cause  but to help the AMGB team get through the long miles of the walk.

The media is full of talk on how some celebrities use their high profiles to serve as role models. Well Missy, despite her high profile in our community, has always made time for such causes as Big Brother/Big Sisters and the Susan G Komen Foundation. This year the AMGB team Missy assembled consisted of Brook Schaaf of Schaaf Consulting, Chris Pearson of DIYThemes, Melissa Salas of Buy.com, Kevin Strawbridge of DealTaker.com, and Lynette LaPlante a 1-year survivor (all of whom are celebrities in my book!).

Also pledged to the team was Brian Clark, aka Copyblogger. Brian has also become a bit of an online celebrity. But apparently he’s now so famous that he couldn’t even be bothered to show up for the Walk on September the 12th and 13th.

Now, it’s understandable to get cold feet at such an event: walking 40 miles in the LA sun is not pleasant. It’s also understandable if some personal or health condition came into play that prevented his participation. But Brian did not only fail to show up to the event, cheer from the sidelines, or provide support during lunch or at dinner; he didn’t even issue one tweet about the event.

Brian Clark is someone who makes his living tweeting and blogging. One tweet from him is valuable; after all he has 35,000 followers. A tweet is the easiest way he could have used to provide support and awareness for everyone involved in the Avon Walk. But apparently even 140 characters was too much to ask.

Instead, Brian occupied himself on Sept 12-13th making inane “not really” tweets with @gapingvoid and quoting George Bernard Shaw. Apparently ‘Man and Superman’ is a concept that Brian is unfamiliar with. Even the strength of the women on his team couldn’t force him to follow through on his commitments.  Maybe someone should send his Kindle the Cliff Notes version.

He didn’t even take the time to respond when AMGB team members teasingly thanked him for providing nonexistent dinner and backrubs at the event. He was a no show in every sense of the term.

Well at least if Brian Clark doesn’t know how to be a team member or role model for his community he can take solace in the fact he’s learned how to handle critisims from drunk Swiss guys. Now that’s insight that’s valuable to everyone.

See the rest here:

You had to be under a rock yesterday to miss the big news: Yahoo took a dose of poison to speed up its death. Rumor has it Steve Ballmer put on a Jack Kevorkian mask to trick Carol Bartz into the deal.

In all seriousness, search has been a confusing place from the beginning and it continues as such. I joined GoTo.com when it was entering the throes of the second phase of search. I have decided to write a different perspective on this with a little long forgotten history. It’s written from my perspective in the industry so if it comes across as self-serving or you want things more clean, just hit the Back button or go read what Danny Sullivan and Jason Calacanis wrote about the deal.

Phase 1: Netscape Built Yahoo, Excite, Lycos and Infoseek

Netscape was THE browser back in the day (I have to put it that way or my Old Internet Guy will be revoked card). It didn’t have its own search engine but it had a button you could press to get to one of the 4 main search engines. The best part was, it gave them traffic for the price of… FREE!

Mind you, Yahoo wasn’t a search engine. It was a directory that David Filo and Jerry Yang (oh, he commits infanticide later in this story) started as grad students at Stanford.

Not that many readers remember the other early players like:  Excite (bought by ISP @Home and destroyed), Lycos (is that German for search?) or Infoseek (bought by Disney, renamed Go and successfully sued by GoTo over the logo before being shutdown… is Disney even on the Web anymore?), and Altavista (which was a project by Digital to prove the value of its servers. It was at altavista.digital.com. Catchy and user-friendly, huh?)

Phase 2: Netscape wants to charge

Imagine that, people realized there was money in search. The big four weren’t so keen on paying (well, the ones that were not Yahoo stuck around for a small amount). There was a group of upstarts with deep VC pockets and were willing to pay to play. GoTo.com was in there as were AskJeeves (IAC later committed “butlercide”), Looksmart (it was our goal that it didn’t look smart… sorry Claudine and Sean), Go2Net / Infospace and a few others. It was fun even if many portal execs (OK, most portal execs) thought we were doing the work of the devil.

GoTo had one thing going for it (this is the self serving part). Todd Tappin, our CFO, wouldn’t let us sign an unprofitable deal. He did let us bid them up to hurt the others, especially Looksmart. There was one deal Jeffrey Brewer, our fearless CEO, insisted that we sign and pray. It was a bet your business deal. It was, of course, Netscape.

Netscape had an annual bidding process for its search traffic. Minimum $30 CPM and maximum 15% of the traffic. I lobbied to have our offer go in at 25% and 35%. We sent in both with different CPMs and (HOLY SEARCH, BATMAN!) they said yes (after asking if we meant it). Panic. Jeffrey remained calm and said he could get the money if the deal went south. Well, the day it was announced the stock we up 40% (we went public 2 weeks prior) and, much to our surprise, it was profitable due to having 20 keywords listed whenever users saw it. That was an important point in the development of paid search. We briefly messed up the marketplace by driving traffic to specific keywords (at least when we let distribution partners do so).

Needless to say, Ask.com is the only survivor of this class (”We’re #3!!!”). GoTo and Altavista (along with FAST and Inktomi) were bought by Yahoo along with Tim Cadogan (who headed up Yahoo Search for a few years before leaving to found OpenX).

Phase 3: Yahoo Builds Google

Did I really write that Yahoo built Google? Yep. Sure Larry Page and Sergey Brin built the technology but Yahoo marketed the hell out of that thing. From 2000-2004 Yahoo continued to provide only the Yahoo Directory and had its search engine “powered by Google”. This legitimized Google by giving it credibility with Yahoo’s users who soon figured out they could go directly to Google.

Google didn’t have to pay for traffic and Yahoo’s former users didn’t have to search via navigating through 6 clicks to find a site in a directory.

Trip to Mountain View to pitch Google on paid search. Yes, we heard that paid search was not relevant and would never be on Google’s SERPs. And they meant it. It wasn’t a trick. Google’s investors later talked to Larry and Sergey and said that the fractions of a cent for Yahoo search was nice to fund development but was nothing compared to what Google could make with GoTo-like paid search. The VCs won and Larry and Sergei became billionaires.

Google figured out to sign a deal that was great for AOL (rumored to be as high as 100% of revenue plus pre-IPO warrants in Google). What did it get from that? It went from 0 to 100 (that’s in 1,000’s of advertisers) overnight as every GoTo advertiser wanted to keep the gravy train that was newbie AOL users.

Oh, MSN launched a search engine too. To its credit, Microsoft wouldn’t poach employees from its partners so Yahoo (which did) got Tim Cadogan.

Over at Yahoo, Terry Semel stepped in and asked why in hell did Yahoo not have a deal with GoTo to monetize search through text ads. Good question. My first call for GoTo (the week before I started) was to Ben Padnos at Yahoo. We spent a year and a half on a deal that got mucked with a handshake (it’s a long story about two people who used to work together and had the relationship turned upside down on this one… oh, and they didn’t like each other). Terry signed the deal and like it so much he bought the company. He didn’t like the idea that Yahoo didn’t have control of its advertiser base (Carol, are you listening? You really should be.)

Phase 4: The Death of Yahoo and the Rise of MicroLiveBing

You’ve all been following what happened to Yahoo when Jerry Yang turned down Microsoft’s $33 a share offer (Oops). You heard that Microsoft just stole Yahoo’s search business with the original Netscape-sized down payment of FREE.

Yahoo hasn’t done much to improve its search engine since Tim left a couple of years ago. Microsoft (as much as we like to knock it for its poor name choices) has been gobbling up every interesting search company it can find and has been trying to build a better search engine. Microsoft even admitted Google was better by using the exact format of Google’s search results (paid and natural). Now it’s buying marketshare.

That leaves us with Google just shy of 70% of the market (including it’s $1 billion dollar deals with AOL and MySpace), MicroHoo at around 28.5%, Ask.com with a few percent (and lots of Google AdWords results) and a few others.

Phase 5: Can there be new search engines?

I really want to say yes but I don’t see how. Back in the day (again, it’s required along with at the end of the day) search engines could start and they could buy traffic. The deals are sealed with BIG money now. They could also get press and get users. The biggest suck in this vacuum is that Google and Microsoft buy them up when they show any promise. And who amongst the giants wants to compete with Microsoft and Google? I’m hiding behind the handball backstop for this playground brawl. These guys are going at it everywhere!

Google has done a few things well.

• Google is a technology company. Yahoo was not, is not and will not be. GoTo wasn’t either. Microsoft isn’t really. By that I mean that Google produces excellent services. They are fast. They are what users want. They aren’t clunky and relying on old technology.
• Google innovates. Who cares if Orkut is only big in Brazil. Look at everything else that Google gives the world… for FREE!
• Google gives it away for free. Half of Microsoft is Windows and Office. If you wanted to hurt Microsoft, what would you do? Give away an operating system (Chrome OS) and a productivity suite (Google Docs). First Round Capital says that “if your company can take $5 of revenue from a competitor for every $1 you earn – let’s talk!” Google uses its significant revenue from search to give everything else away… for FREE! Why? People keep coming back. As much as I want to hate Google, I now have a G1, I use Gmail, etc., etc., etc.

Google isn’t great at marketing, Apple is. Google just builds great technology. It’s winning. If it keeps innovating, it has a good chance of becoming really scary (or even scarier). Think about how many entities’ livelihoods are based on changes to Google’s natural search algorithms and paid search rules. A couple of years ago I read an article on the half-life of tech leaders (I think it was by Josh Kopelman but I can’t find it). IBM’s dominance lasted for 30 years. Microsoft’s for 15 years. Google is past 7 1/2 years. Hmmmm….

I hope that Microsoft succeeds on this one. It hasn’t used its near-monopoly power well in the past. I hope that we can see the market stabilize at 60/40 or to have a real third player (kind of like how I’d like a centrist political party in this country).

My only prediction on this is that there will be a new battle for distribution. Microsoft needs more search traffic. It needs to provide a big base for advertisers to get the CPCs up and to make it worthwhile for us all to spend money there. And it needs the traffic to prove the credibility to the end users and the experts who make the noise that the general public hears. Steve Ballmer has stated that he is willing to spend BILLIONS a year on search for the next 5 years. The man is the world’s first employee billionaire. He seems to know a thing or two.

My only question is this: Microsoft is paying for the search traffic on Facebook. How is it that Facebook still provides 19% of Google’s traffic?

Excerpt from:

Good news for Net Neutrality. This administration has shown that they are committed to the principals of Net Neutrality based on language in the rules recently released for the broadband stimulus funding. The Broadband Technology Opportunities Program (BTOP) is offering grants for: deploying broadband infrastructure in un/under-served areas; enhancing broadband capacity in public computer centers; and promoting sustainable broadband adoption projects. The rules require all grant winners to follow the FCC’s 2005 Internet Policy Statement as well as specifically calling out neutral traffic routing.

This shows that Net Neutrality is not some impossible to understand arcane rules that is anti-consumer like the opponents try to make you think. Opponents talk about extra government regulation, bureaucracy, and confusion because nobody really knows what it means. If the government can explain it in a few sentences in a 121 page document, then how hard can this concept really be to understand?

These rules are specifically called out and described in the Interconnection and Non-Discrimination Requirements section (Page 113) where they require applicants to commit to five obligations (page 114):

1. Adhere to the principles contained in the FCC’s Broadband Policy Statement (FCC 05-151 adopted Aug. 5, 2005).
2. Not favor any lawful Internet applications or content over others.
3. Display network management policies in a prominent location on the service provider’s web page and provide notice to customers of changes to these policies (awardees must describe any business practices or technical mechanisms they employ, other than standard best efforts Internet delivery, to allocate capacity; differentiate among applications, providers, or sources; limit usage; and manage or block access to illegal or harmful content).
4. Connect to the public Internet directly or indirectly, such that the project is not an entirely private closed network.
5. Offer interconnection, where technically-feasible, on reasonable rates and terms to be negotiated with requesting parties. This includes both the ability to connect to the public Internet and physical interconnection for the exchange of traffic.

The second one is very specific here in the description where they say that:

This requirement ensures neutral traffic routing. Without a non-discrimination condition, network operators could give preferential treatment to affiliated services, or charge some application and content providers for “fast lanes” that would put others at a competitive disadvantage.

The document continues with text about the AT&T/Bell South merger requirements and notes that this is a more general version, allowing the carriers more room to cache, manage spam, deal with DNS attacks, etc.

Go a few more pages and on page 118 they continue with the justification:

Overall, these five requirements ensure that public funds will support the public goal of open networks. The standards chosen echo established FCC rules, but avoid detailed regulation and allow for flexibility when network management requires differential treatment or exclusivity.

The section concludes by noting that the rules apply for the life of the facilities and that failure to comply would likely be considered breach of their loan or grant agreements at which point one would assume the money would have to be repaid.

This really is great news. If the government is going to be spending our own tax dollars (stimulus funds) to improve broadband coverage across the country, then access should be equal to all for all content.

Go here to see the original:
Net Neutrality Mandated in $7.2 Billion Broadband Stimulus Funding

From the staff, designers, authors and contributors here at Revenews to all those who served our country over the years and to those who still serve today and their families: a heartfelt thank you.

Korean War Memorial Atlantic City. Picture By Ron Miguel RN.

Originally posted here:
We Salute You

After the first day of ad:tech I thought things were going pretty well for the industry.  Day two gave me time to make some more sessions (I live twittered them) and spend some time on the two levels of the exhibit hall.  Many booths were noticeably smaller (Google) or missing (Yahoo!), the tchotchkes were noticeably minimal if they even had them, and the parties were quite often cash bar.

Years past the trip through the show floor for goodies yielded a plethora of cool, weird, and boring items (SF2007, SF 2007, NY 2008) to tempt you to stop by the booth.  This year there were a few worthwhile things like the purple octopus, but it was moslty pens and handouts.

It looked like there were a ton of parties (eight Tuesday night that I knew of), but very few were open bar.  In the past, every party I was invited to (and as press I get invited to most) was open bar. Companies are still spending the money to get their name out there and make a splash, but they seemingly can’t afford the extra outlay for the alcohol. Not all parties were cash.  The beer was flowing freely in the Beer Grden at the Affiliate Summit Networking party Tuesday evening.

There were some positives. ad:tech added a new part of the show called ADSPACE, dedicated to “contextual advertising.” I have to put it in quotes because there were a number of sessions that lightly touched on contextual ads and got into ad serving, performance marketing, metrics, affiliate programs, etc.

One session was titled “Beyond Text Ads: In Text, Affiliate, Led-Gen, eBay and More!”  This alone shows that ad:tech is expanding and growing into a show that covers all the ways people monetize their sites.  The performance based industry was well represented and every mention I heard talked about how the ROI was superior to other channels.  There was some great discussion on tracking multiple channels and that dollars are being shifted to the channel because it is measureable and performs so well. Real issues such as fraud were brought up, but it was discussed rationally and affiliates were not painted negatively with a broad brush.

I think the addition of the new ADSPACE track and exhibit area was a great idea and will help improve ad:tech as well as the performance marketing industry as w whole.

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Unless you have been living under a rock, you are aware of California (and other) states efforts to copy New York and collect sales tax on affiliate initiated transactions. Collection of sales tax is important, and states are right to be concerned about taxes that are owed to them and not being collected.  But this is the wrong way to go about collecting this money and can easily cause more harm than good.

The California bill is Assembly Bill 178 sponsored by Assembly Member Nancy Skinner. The hearing date on Bill 178 has been scheduled for April 13, 2009.

We all learned a hard lesson in New York.  Luckily that lesson is being applied right now in California.  Action needs to be taken now while the bill is still in committee.

The PMA’s Stance

The Performance Marketing Alliance has formed a committee led by the experienced Beth Kirsch who has done lobbying at the federal level.  She has been working with a coalition led by the Chamber of Commence and the California Taxpayer’s Association that includes the big players in the Tech space. This coalition has had success with similar bills in the past. With companies like Google, Yahoo, eBay, and CJ all based here, there are a lot of big companies with vested interests that are taking actions either as part of this coalition or on their own.

The PMA is a valuable addition to this coalition because we can put a face on the issue.  We can get real people with real stories to talk about what this bill can do to them.  As such, the PMA is leading a grass-roots effort to spread the word about this to as many people in this industry as possible.  They have more in the works as well, with details coming out as they develop.  There are some more meetings today, and strategizing over the weekend.  After that, I expect to see plan laid out.

Likely there will be a need for people who can go to Sacramento, people to make appointments for in-person visits with their own representative, letter writers, and press outreach. If you can help with any of that, please contact the PMA to see how you can help.

Other Resources to Help Combat the Bill

There are other resources to check out as well. CAaffiliates.com is an ABestWeb forum for the discussion of the bill. Both Mark Welch and Scott Jangro have written excellent letter’s on the matter (Mark’s letter (pdf) and Scott’s letter) which I encourage you to read.

How Can You Help?

Discuss the bill with people. Let them know why it’s a bad idea, inform them. If you have a blog, make a post.  If you are on Twitter, Facebook, LinkedIn, etc. use them to spread the word and link to places where this is being talked about. Create discussion and make your voice be heard.

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Affiliate Taxation – Time to Fight Back

Here at Revenews we strive to provide content not previously published elsewhere. The following article by longtime Revenews author Brad Waller focuses on Net Neutrality. A timely and important subject worth revisiting.

This column is an outgrowth of a post made on our internal email list. A debate was started by a discussion of the Wall Street Journal article on Google looking to embed their servers with the various cable and network providers, and the intimation that this was a violation of “Network Neutrality.” As the discussion evolved, one participant wrote “This issue is so convoluted, it will require Stephen Hawking to sort it out.”

I’m not Stephen Hawking, but I am a Physicist…

What I get out of this is that Google wants to co-locate their servers inside the facilities of the Telcos so that the pages are served faster. They are asking to pay for this, and not to exclude anyone. This is a way to reduce latency and get better performance; this is not a fast track with preferential treatment. If Google were to ask for exclusive co-location, then there might be an issue. If the service providers were to downgrade everyone else who did not pay, that would be an issue.

Has anyone ever made claims that Akamai was violating Net Neutrality? They have servers located around the globe to optimize the delivery of their customers’ content and no non-customer has complained of unfair treatment when their content was not included for free.

The Net Neutrality issue is that the Telcos want to treat traffic differently by source. One video stream might be slowed down, while another might get the fast pipe. So I may be paying for 15/5 megabit service, but my ISP might decide to throttle some new company down to 1 megabit because they are not paying the extra fee for the best service. Maybe the ISP has their own video streaming service, and they want to charge the competition a dollar a bit to transmit the data, thus cutting everyone out. Maybe they want to charge a million dollars for the service, in which case the biggest services will be able to pay, and the up and coming services will not be able to afford it and fail because customers will see really slow file uploads.

This can be particularly stifling to new services that cannot compete with the established deep pockets and cable companies. What would Twitter do if they were asked to pay a fee for every tweet that gets passed through the network providers service, or risk being “managed” to the point where the real-time benefits are eliminated. Without a revenue stream they would just go away. How about Facebook? They are just starting to monetize their service and something like this might be enough to kill them off. I’m sure that is fine for the providers. But what about consumers?

This whole issue is one of doublespeak. Net Neutrality is really free and open access for all, yet the opposition calls it excessive regulation of the Internet. Senator Ted Stevens kicked this off back in 2006 when he said, “Until somebody tells me what net neutrality means, until they can give me a definition, I don’t want it in there. Right now, nobody knows what it means, so why put it in the bill?”

If nobody knew what it meant, then how did the FCC define it in an agreement with Verizon over their acquisition of MCI in 2005 where they agreed to “adhere to ‘network neutrality’” principles adopted by the FCC earlier this year? So Verizon had to agree to abide by Net Neutrality to get their merger approved, and now that agreement periods are over these companies are arguing that these same principles that they agreed to are confusing and impossible to define, as well as being unneeded government interference with free trade.

I think this issue is too simple for the government. Neutrality at is most basic means that ISPs pass through everything that comes in exactly the same, no matter the protocol (like Comcast) or source. Just treat all Web sites and services as equals with the same access to bandwidth. That way email, Web pages, music, streaming video, P2P traffic, and yes, Google, get the same access to bandwidth without any interference or additional charge.

An ISP or bandwidth provider must route all traffic and treat it equally. Act like a switch: data in, data out.

This article originally appeared in the newsletter for the Internet Oldtimers Foundation.

See original here:

Affiliate Summit West 2009 in Las Vegas came to an end this Tuesday. I am always fascinated by the fact that I get something out of it, which I had no idea about when I entered the airplane in Fresno last weekend to go to the conference. Sure, I always like to get back in touch personally with the friends and business partners who I more often than I’d like to, neglected during the past months.

A large part of the year 2008 was again sucked away by some invisible force, which cannot be explained with any know law of physics. I just had the feeling that the year was by no means anything as close to 365 days in length. 120 days is probably much closer to the “felt” length of the previous year. No computer will change this feeling of mine. I know it were 365 days, but try to get this message to my intuition and my guts.

Getting Efficiency Back into Performance Marketing

I stumbled across an interesting article by Jeff Molander, CEO of Molander and Associates, which was published in May 2008 at the UK marketing research company blog by eConsultancy (like a Brit version of MarketingSherpa / MarketingExperiments).

I didn’t see this one when it was published it last year. As I mentioned already, it was written in May 2008. Now it’s January 2009. I suggest that you are going to read Jeff’s article, it is most certainly worth your time.

Where are we today? Did things change? … I don’t think that they did very much… a little bit, true; I have to be fair with that one.

The holistic approach should be taken beyond affiliate marketing and applied to all marketing activities that can be tracked somehow, online and offline (pay-per-call is getting more and more mature these days)

eBay Seems to be Leading the Pack once more

I attended this Tuesday at the summit a session by Steve Hartmann und William Martin-Gill from the auction giant eBay.com. The affiliate manager(s) from eBay were giving a presentation that I found pretty interesting. I did not follow the eBay program during the last year very much; I have to admit to my discredit so what they were talking about was all news to me.

eBay does pay affiliates based on the value and quality of the business that they refer. This is not in beta, they doing this across the board today already.

This shift that eBay underwent after they moved their program away from Commission Junction and brought the whole program in-house was also causing a shift within their programs list of top 100 affiliate partners (they said that, not me). They were basically able to clean up the house. Sure, they lost some publishers over this, but why bother; those publishers were the ones that only sent low quality traffic along their way. The publishers who send great traffic on the other hand, saw their commission double and quadruple instead.

Affiliate Marketing Worldwide

Affiliate Marketing in Europe being behind the U.S.? Look again!

I also touch-based with some European affiliate networks and German OPMs, specifically with Deputy Managing Director Torben Heinmann from TradeDoubler Germany (which does not have a presence in the United States … YET), Markus Kellermann Head of Affiliate Marketing and some of his colleagues from eXplido Web Marketing.

They actually implemented already tracking technology that is capable to provide analytics and commission structures attached to that data, which goes beyond the mere “last click” and “banner impression” of how U.S. Networks track stuff since the day when Amazon.com launched their partner program soon to be 15 years ago. They basically do some crude multiple-touch-point tracking of clicks and content views (e.g. video watches). Nothing as sophisticated as some of the top web analytics solution providers is capable of, but hey, it’s going into the right direction.

Nothing new from our old, big and fat networks here in the States. It seems that they try to ignore the changes around them for the greater part, hoping that things will be as good (for them) as they always were. I get the feeling that some executives at those networks (I won’t mention names) live in some state of denial of the realities of this industry.

Europe did not only catch up; they surpassed us already!

In 2003, Germany and the rest of Europe seemed to live in the affiliate marketing stone age. Over the years, this huge gap got smaller. After I learned at ASW about what they are already doing today, I’d say that there is no sign of this old gap anymore at all, quite the opposite… A gap is opening again, but this time the other way around.

U.S. based networks who continue to live in their bubble, will one day go down together with it, if they don’t start getting their act together soon and do some catching up with the rest of the people on this planet.

My Personal Affiliate Summit West 2009 Session and Panel Highlights

What was the IMO most Disappointing Session at ASW 2009?
Believe it or not, I was actually able to manage seeing a bunch of the educational sessions at the Summit. The picks that I made were pretty diverse. The first session where I was able to make it to on Sunday was the session/panel about “Ethical Issues in Affiliate Marketing“. It was moderated by Haiko de Poel Jr. from ABestWeb.com and included the panelists Brian Littleton, CEO of the affiliate network ShareASale, old-school super affiliate Connie Berg, founder and owner of the top-coupon web site FlamingoWorld.com, among other successful affiliate projects, OPM Chuck Hamrick from Affiliate Crew and last but not least a guy from a toolbar development company and subsidiary of Rakuten, who owns the LinkShare affiliate Network. (I am sorry, I cannot remember the guys name. He jumped in last minute for Paul Nichols from eBates.com)

The session was a bit of a disappointment for me. I don’t think that it was the fault of Haiko or any other panelist in the room that the session pretty much fell flat on its face and was over after 40 minutes already (20 minutes too short), because nobody had anything to comment, ask or say at the end.

I think that biggest problem was that right from the start more than just one major industry problem became the herd of elephants in the room. It was impossible to tackle all of them at the same time, because it takes much more than the time available for average comments and questions to even scratch the surface of just one of the issues that filled up the room like smog the L.A. city limits during rush hour in summer.

Maybe we should try one issue at a time the next time around. I don’t know. It’s tough and my suggestion to the approach of the subjects might falls as flat on its face as the approach last Sunday.

What was the IMO most Productive Session at ABW 2009?
I would say that is title has to go to the panel “Super Affiliate PPC Marketing Strategies” moderated by Anik Singal of Affiliate Classroom and panelists Rosalind Gardner, author of the Super Affiliate Handbook and CEO of WebVista, Inc., Colin McDougall, author of the VEO Report and CEO or the VEO 2.0 Elite Certification Course and last but not least, super affiliate and fellow blogger Amit Mehta, CEO of Performance Marketing Worldwide and author of the blog Super Affiliate Mindset.

The panel was very well moderated and thought through by moderator Anik Singal (hey, it’s the experience from teaching at Affiliate Classroom and PPC Classroom I guess). The panelists themselves were also top of the crop, long time affiliate marketing professional with hands on and real as reality gets experience in various different areas and niches of this industry.

It was demonstrating nicely to the audience that there is simply no silver bullet in this business. There are numerous different (and sometimes even conflicting) ways to be successful as an affiliate marketer.

Why I think that this session was the most productive? Very simple answer: All of the panelists were speaking blunt honest about everything they did right and where they screwed up. No panelist was holding back any secrets and answered any of the many asked questions as good as humanly possible. I don’t think that anybody who was asking a question walked away without an answer or at least with a sack full of ideas and things to check, measure, verify or test.

After the session was officially over, all panelists remained where they were and did not leave until they responded to/answered the questions that people who approached them personally, were asking them. I stood next to a visitor who was getting a crash course in PPC campaign creation and initial testing by Amit. The tips were not vague at all… real figures and numbers were given. Tools mentioned by name and URL, even the personal unknown favorites, which might provide a cutting edge over competitors, while you know about them and they do not.

Very refreshing!

What was the IMO most Enjoyable Session at ABW 2009?
The session that was one hour long, but felt like 30 minutes or less, while getting a ton of specific tips and information, the none-specific, but bloody honest truth (test-test-test-test, don’t guess or assume = work), mixed in with some humorous, interactive and engaging segments to get the crowds full attention while at the same time help the listeners to relax a bit to be able to suck in more facts about a somewhat dry and boring subject. Well, a subject that involves hands on the job work, and separates facts from fiction. What I am talking about? “Landing Page Testing to increase Conversion“, presented all by its lonely self, Tim Ash, CEO of SiteTurner.com and author of the book “Landing Page Optimization“, which I can also highly recommend buying by the way. I wrote a short review about it on Search Engine Journal when it came out.

Tim knows his stuff and is not kidding around. At the same time he knows how to present structure and perform a presentation that is never boring for even a second and where you walk away from with the feeling and knowledge, that you learned something new, that you did not know or even thought about before the session.

What Else is New?

I did a video interview with Angel Djambazov, Marketing Manager at PopShops.com and Kellie Stevens from Affiliate Fairplay at Affiliate Summit West 2009 at the Rio all-suites hotel and casino, January 11-13, 2009, in Las Vegas, Nevada on January 13, 2009. The interview is about ReveNews.com where Angel is Editor in Chief and about Kellie’s commitment to write some posts for ReveNews.com, if Angel will send her some premium coffee from his home in Seattle, Washington. Kellie’s posts are something that is worth looking forward to. Kellie did win Affiliate Summit Pinnacle Award for Affiliate Marketing Legend the day prior to this interview for some good reasons. Billy Kay also made a commitment I got told by Angel, but unfortunately I was unable to get this commitment on camera by Billy himself.

Here is the video interview. Also mentioned in the Video were Wayne Porter and Pat Grady.

More ReveNews.com Bloggers Wanted
Furthermore, Angel mentioned that despite the various new ReveNews.com bloggers he was able to get to write and contribute to this blog, especially experts in the social media space; RN still needs some expert voice and opinions to other relevant and important subjects, such as Net Neutrality and/or Internet Security. Those subject used to be coved well in the past, by another Affiliate Marketing Legend (the first one actually) and co-founder of this web site, Wayne Porter.

Unfortunately does Wayne not write as much (and long, longer than mine, seriously hehe) as he used to not too long ago. This is sad, but nothing Angel or I can do much about it, except for hunting down some experienced security experts with some writing skills to fill the huge void that the absence of Wayne created here.

Some Fun at the End to Loosen Up a Little Bit
I published a second video, which is only one minute in length about the Affiliate Summit Triathlon. It’s actually a funny video. I hope you will enjoy it, but do not forget the serious issues that I was pointing out in this post over all this fun and excitement.

Affiliate Summit West 2009 Triathlon Best of – Crashes

Okay, that is enough now!

I can already see Shawn Collin’s face, when he looks at this post of mine and thinking to himself “Gee, again one of Carsten’s overly long blog posts that I am not able to read entirely, because my attention span does never exceed 500 words at one time“.  Sorry Shawn, but I hope that my paragraph headings will help that you are not missing too much of the facts and details of my post hehe.

Cheers!

Carsten Cumbrowski

Check out my free collection of useful internet and affiliate marketing resources at Cumbrowski.com. All the hard research work done for you already, that you don’t have to. You’re welcome!

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Affiliate Summit West 2009 Recap and the Issues Ahead for the Year 2009 and Beyond

First, I want to wish everyone a happy holidays and let all of our partners know that we really appreciated the cards and gifts this year.  It’s always nice to spread the holiday cheer and wish everyone a healthy and profitable 2009!

That being said, let me go into a mini-rant mode.

Many of us spend a lot of money with Google every day, month, week and year.  Each year Google has sent out a nice holiday gift thanking their top advertisers for their participation in Google’s Adwords program, nothing fancy, a USB card, an electronic travel kit, or my favorite, a donation from google to a charitable project of your choosing.  Often the blogs are a buzz with the Google gift of the year.  This year?  Nothing.

I reached out to some other top ppc affiliates and have heard the same thing.  Many companies have cut back on holiday gifts, and I think that is a sign of the times in this economy, but when you are working with a company like Google and are spending upwards of $1M per year with them, seeing them cut back on the holiday cheer seems a bit Scroogish to me.

Thoughts?

Credit:
The Google Scrooge of 2009?

You know those little icons on your desktop that designate the presence of a active program or the same icons in a browser that designate the presence of an active file? Mac or PC you have been using them for years, right? Well according to the US Patent and Trademark Office (USPTO) only Michigan based Cygnus Systems, Inc. owns the rights to visual representation of that active program or file via a thumbnail. And Cygnus is suing to protect those rights.

According to Ars Technica, application developer Cygnus first filed for the patent in 2001 as a continuation of an original application filed in 1998. The patent covers thumbnails, or more specifically the navigation and access of files based on representational thumbnails.  In May 2008 US Patent # 7,346,850 was granted.

It is a shining example of what is wrong with the US Patent system which is woefully incapable of dealing with either the rapid growth of new technology online or the expanding number of companies that exist in the space.

Established in 1790, the purpose of the US Patent Office is to issue state and federally recognized writs designed to help protect legitimate innovation. As long as there have been inventors there have been profiteers who seek to use intellectual property as leverage against a competitor or simply to extort money.  In such cases, the existence of a patent can protect the creative, intellectual and financial rights of the holder.

However, modern patent profiteers are not so easily contained.  As Supreme Court Justice Anthony Kennedy stated in a concurring May 2006 eBay Inc v. MercExchange, L.L.C., 547 U.S. 388 (2006) decision,

“In cases now arising… the nature of the patent being enforced and the economic function of the patent holder present considerations quite unlike earlier cases. An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees.” (PDF of text of the decision)

The Case of Amazon

Let’s take as an example one of the most famous cases, US Patent # 5,960,411, known as the Amazon 1-Click patent which covers a “method and system for placing a purchase order via a communications network.” Twenty-three days after the patent was issued Amazon tried unsuccessfully to wield it as a weapon against Barnes & Noble in a suit filed in 1999.

This led to cries for a boycott of Amazon spearheaded by the slightly fanatical Richard Stallman. Thankfully, mainstream voices like Tim O’Reilly founder of O’Reilly Media, jumped in. O’Reilly stated he felt Amazon’s patent was, “a land grab, an attempt to hoodwink a patent system that has not gotten up to speed on the state of the art in computer science.”

The 1-Click suit was settled in 2002 under undisclosed terms. Shortly after the settlement Amazon CEO and founder Jeff Bezos posted an open letter on patents (interestingly the letter can no longer be found on the Amazon site). In the letter Bezos calls for patent reform stating that the “vast majority of our competitive advantage will…come not from patents”. He does however say that they will not give up their patents; instead Amazon will simply be more careful in how they use them.

But the fact is that Amazon also owns the patents for 404 Pages (US Patent # 7,325,045) and for Affiliate Referrals (US Patent # 6,029,141) among a host of others the common use of which can be found on almost every website online.

Think about it.  How many web designers and how many company websites use 404 pages?  Almost every website you see online today. And as for affiliate referrals, well apparently the whole industry is indebted to Amazon.

Hopefully the backlash from Amazon’s use of the 1-Click patent was strong enough that they learned from the “harvest of ill-will”, as O’Reilly put it, received from the online community. However, Amazon’s current patents, including the cookie patent which is still active, cover more territory than I feel comfortable leaving to any one company’s discretion.

Should Software be Patentable?

The case against patenting software or codeware is made using three arguments:

1. Software is already afforded copyright protection thus it is adequately protected
2. The creation of software code is not dissimilar to mathematical algorithms which are not patentable. According to Gottschalk v. Benson 409 U.S. 63 (1972) “an algorithm or mathematical formula is like a law of nature, which cannot be the subject of a patent.”
3. Software patents currently 17-20 years in term, have a disparate negative impact on freeware and thus stifle innovation.

Personally, I feel that the copyright argument only is tenable in cases where the software is sold via packaging or download. Designed to protect the publication, distribution and adaptation of an author’s work, copyright does a very poor job protecting code tied to web development as any site that has been scraped can testify, due to lack of enforcement ability.

The math argument is indeed perplexing due to the similarities between math and code. However, the way software has evolved, allowing for people and companies to interact with it through hardware in a way that is inherently different than the way math has evolved due to ease of access. The idea that under the math argument, patent law would treat have to treat software different than hardware which through common use it is coupled with, is untenable to me.

Finally there is the argument of the disparate impact on freeware. It is true that large corporations have the legal resources to wield patent legislation tactically against potential competitors. The reverse edge of the argument is that under the current structure corporations also have the legal resources to stifle Open Source software by patenting ideas that are already in the public domain.

Rise of the Prior Art Database

The call for patent reform as put forward by O’Reily and Bezos was published in 2000. In his letter, Bezos states that the process could take “2 years or more”. Ironically that is approximately the date of the settlement with Barnes and Noble. Aside from putting that issue to rest has anything significant change happened?

Although it was mentioned again in a Wired interview, the prior art database which would provide an easily accessible resource of prior art examples to help determine the originality of an invention, that Bezos’ offered to fund in his letter has never materialized.

Even though Bezos wasn’t able to put together his version of a public focused prior art database several other have stepped up to do so. The Open Invention Network launched what it calls the LinuxDefenders.org. Co-sponsored by the Software Freedom Law Center and the Linux Foundation its mission is to, “eliminate poor quality patents…and codify known inventions” thus protecting individuals from larger corporations. It advocates a peer review process for issued patents and the creation of defensive publications to high light prior art instances. Others include Wikipatents and the Peer to Patent Wiki.

Clash of the Titans

In 2007 a coalition of Patent Fairness was formed specifically to help push legislative reform. Members included Amazon, along with: Apple, Cisco, Dell, Google, HP, Microsoft, Oracle, Palm Inc., SAP, Time Warner and Visa among hundreds of others. Their stated mission is to “improve the quality of the patents being issued” and “re-balancing and strengthening the patent system”. Many of their goals were made into what’s known as the Patent Reform Act of 2007 (H.R. 1908, S. 1145).

The problem with reforming the US Patent System, as with any legislative body, is the complex number of special interests and industries such changes potentially impact. The Patent Reform Act sought to create major changes in the current system including:

1. eliminating so-called “submarine patents” often used by patent trolls that purposefully keep patents hidden only to target companies for lawsuits who unknowingly infringe on them
2. allowing for a post-grant review process via petition instead of the current limited options of litigation or USPTO reexamination
3. changing the system from a “first-to-invent” system to a “first-to-file” system which would bring the USPTO in line with the rest of the world

The Patent Reform Act met with heavy resistance.  General Electric, DuPont, Corning and many universities stepped up to defend what they saw as an attack on the biotech and pharmaceutical industries. The AFL-CIO  resisted the bill with concerns (pdf) that it would weaken protection for American manufacturers. And a coalition of headed by the Patent Office Professionals Association expressed concerns (pdf) that changes would “significantly weaken…the strongest (patent system) in the world”.

Despite the resistance the Act did pass the House of Representative in 2007. The Act however stalled in the Senate in 2008 where it fell out of the Judiciary Committee process allowing Senate Majority Leader Harry Reid to pull the bill from the floor schedule.

Cygnus’ Thumb

All of which leads us back to Cygnus Systems, Inc. which filed suit on Friday against Microsoft, Apple and Google over representational thumbnails. The lawsuit lays down a scattershot of features it feels infringes on Cygnus’ patent including those found in: Window’s Explorer, Apple’s Finder, Opera, iPhone, Safari, and Google’s Chrome. The suit not only goes after retroactive damages but also seeks a “permanent injunction” against further infringement.

Now I don’t know if Cygnus’s owner Gregory Swartz is a patent troll. He may genuinely feel he is simply protecting a technology that he developed.  In theory Swartz should have provided the USPTO with any examples of prior art he was able to find, “if” (as the law reads now in Rule 1.56) he was able to find such examples. It is telling that Information Week writer Dave Methvin found “after only five minutes of searching” prior art examples of the thumbnails in a book by David Karp titled Windows 98 Annoyances (got to love the irony in that name).

What I do know is that 10 years is far too long of a timeframe for a patent to be reviewed prior to being granted. As of the end of Fiscal Year 2008 (pdf) there are 1,208,076 patent applications still pending at the USPTO which essentially indicates a 3 year backlog. That’s a clear sign of an organization that doesn’t have the capacity to keep up with the times, much less the resources required to the determine validity of something as minuscule as a tracking cookie or as abstract as a 404 page.

Although the IEEE does raise valid points (pdf) against the structure of the Patent Reform Act as it languishes in the Senate, some sort of reform must happen. I think the easiest methods would be to a) shorten the length of software patents down to around 5 years; and b) modify US patent rule 1.56 to stop rewarding willful ignorance and require companies to search for prior art.

Without reform our industry can never hope to get out from under the thumbs of these patent trolls.

Originally posted here:
Cygnus Provides Reminder Everything is Still Patently Unclear

In tough times companies are forced to make difficult decisions. Sometimes they make wrong ones. Best Buy made an epically dunderheaded one this week when it announced via email that affiliate commissions for two of its best selling product lines was being dropped from 1% to .25%. A quarter of a percent is insulting to anyone you refer to as a partner. The backlash on boards like ABestWeb.com has already built up as professional affiliates wonder how such a big player could display such a lapse in judgment.

Anatomy of a Bad Decision
Corporations are prone to knee jerk reactions. Especially in crisis situations or tough times. When it comes to cutting costs often the cutting is done by those not directly involved in day-to-day affairs.

In this case you can almost imagine the thought process: We are practically giving away commissions to affiliates on items that would sell anyways! Why don’t we cut the commission rate and increase our profit margin?

A bad decision is made even easier by the fact the Affiliate Channel is often a nebulous component to most corporations’ online marketing strategy. Difficult to understand, easy to undervalue, corporate advertisers often make the mistake of treating the channel with a “set and forget” mentality or deliver campaigns to affiliates with the expectation they will accommodate last minute promotions which should have been planned well in advance. Many such advertisers also make the assumption that affiliates will not make business decisions of their own and simply take whatever leftovers are handed to them.

Real Troubles
In Q3 of this year Best Buy reported that profits dropped 77% year over year. According to the report 4,000 employees at its headquarters were offered buyout packages in an effort to cut costs. The report also quoted Chief Executive Brad Anderson as saying,

“We believe that there has been a dramatic and potentially long-lasting change in consumer behavior as people adjust to the new realities of the marketplace. We also believe that customers will continue to reward those retailers who understand their needs and desires, and offer relevant solutions at fair prices.”

Obviously the company is taking serious steps to make themselves more profitable. While I genuinely wish the best for their employees, cutting the commission percentages on a few top selling items will not make or break the company. It will however sour relationships with affiliates.

It’s an Affiliate’s Marketplace
Anderson is right that customers will continue to reward retailers who understand their needs. So will affiliates.

Best Buy runs their affiliate program with Commission Junction. According to numbers released by CJ comparing same store retail sales, network wide CJ affiliates averaged 73% growth on Black Friday and 39% growth on Cyber Monday year over year. Impressive numbers when compared to comScore posting of overall online sales during the same time period.

Presumably sales were good for the Best Buy affiliate program as well. The email explaining the commission cuts seems to support that stating:

“The Best Buy affiliate sales force has exceeded our expectations during these trying economic times. These important contributions are greatly appreciated. This commission reduction originates strictly out of economic necessity in a growingly price-sensitive marketplace.”

According to Yahoo Tech News the Wii is the top selling item this holiday season. Laptops are another hot commodity. Many other merchants sell both including Buy.com, Amazon, Wal-Mart, and Target. All of whom are competing with Best Buy for the same customer.

As an affiliate you have a choice. Are you going to stay loyal to Best Buy and refer your valuable traffic to them for .25%? Odds are you are going to send the traffic to a merchant who is offering better commission on those same items. Whatesmore, as an affiliate it is just as simple to send all of your traffic to a competitor instead of attempting to redirect traffic for those few items whose commission you are being low balled on.

Gut Check
It would be one thing if Best Buy was withdrawing ads from areas that have a poor ROAS.

Because of their footprint it is doubtful that Best Buy will suddenly pull back from television or print ads, nor should they be expected to do so. The stores that provide jobs to the approximately 150,000 employees are obviously their bread and butter. But surely if they are pulling back from the affiliate channel due to a “growlingly price-sensitive marketplace” they are also pulling back from CPM buys online. As typical with corporations more comfortable with offline campaigns than online campaigns, this doesn’t seem to be the case you can still see them in remnant media placements.

So the affiliate channel, the one that creates the most return for the advertiser’s dollar is the one Best Buy has chosen to cut. It’s expeditious to cut revenue to a channel you don’t understand in order to create higher profitability on items you feel you will sell anyways.

The fact is in these tough times affiliates are sensitive as well. The professional ones will send their business to merchants who are truly interested in cultivating a partnership. Only time will tell what a dent .25% will put in Best Buy’s affiliate program and their overall sales.

Read more:
Best Buy Gives Affiliates a Slap in the Face