January 17, 2012

Are affiliate bookselling programs dying off?


Powell’s Books has long enjoyed a unique place on the internet. Being both an indie and a business large enough to run its own affiliate program, Powell’s has been the anti- Amazon/Barnes & Noble for the conscientious online book buyer. Bloggers, too, that want to avoid doing business with either corporation have used Powell’s as their go-to affiliate program to generate money from their blogging. It isn’t shopping local, but it sure isn’t like buying from one of the chains or Amazon. Or so goes the conventional wisdom.

Powell’s is an amazing bookstore, there is no doubt about that, and certainly all the more impressive for its affiliate program. But this badge of independence, however deserved, and the good will of its many internet customers is not going to protect Powell’s from a new era of tax legislation. The indie giant, like Amazon and B&N, faces a series of new laws that may in time render its affiliate program obsolete.

In a statement emailed to all participating affiliates in Pennsylvania, Powell’s Books announced that it will be terminating their role in its affiliate program. The notice opened thus:

It is with great regret that we are terminating your participation in the Powell’s Books, Inc. Partner Program. We need to do this in response to the Pennsylvania Sales and Use Tax Bulletin 2011-01.

As an independent retailer, we support and respect local economies and communities and do not disagree with the notion of collecting sales tax online for out-of-state purchases. However, at this time, the costs involved in implementing tax on our sales to Pennsylvania would be too high for us to bear. Thus, in order to comply with the new law, we are closing all partner accounts based in Pennsylvania.

Much has been made about Amazon’s vicious fight with states concerning the internet giant’s refusal to pay state sales tax. The tide has turned to some degree, with several states either demanding the taxes or creating a cut-off point for when Amazon will have to begin collecting sales tax for the state level. It seems that Powell’s, though hardly on any state’s radar in a manner similar to Amazon, is getting out of the way (with some class, it should be added).

With local bookstores increasingly looking to retail their own ebooks via Google eBookstore and bookstore websites becoming as important as their brick & mortar facade, you can’t help but wonder if these regional entities won’t end up replacing Powell’s as the “enlightened” choice for local consumers.

In a New York Times piece titled “Online Shoppers Are Rooting for the Little Guy” Stephanie Clifford reports that just that is occurring:

“Folks are exercising their desire to support local stores where local is not just in their town, but anywhere in the country,” said Michael Walden, a professor who studies regional economics at North Carolina State University. “A large number of Americans have a general suspicion of bigness in the economic world — they equate bigness with power, monopoly.”

Lacy Simons, owner of Hello Hello Books in Maine, a small store with an e-commerce site, says she is seeing customers “cement their determination to shop local” — which on the Internet, means shopping at the smaller vendors — even when the big sites offer lower prices.

“We know there’s only so much that we can do to compete against them, so you end up relying on what hopefully becomes an emotional or personal connection with the retailer online,” Ms. Simons said.

All this makes one wonder if there isn’t a bit of opportunity here for local bookstores to pick up some of slack as the big guys retreat. All the more reason bookstores and bookselling organizations (ahem) should be looking at improving their online retail experience.

Paul Oliver is the marketing manager of Melville House. Previously he was co-owner of Wolfgang Books in Philadelphia.