Today, Amazon terminated its advertising relationship with LessonIndex.com, because the State of California forced it to do so. California just blocked 26% of my advertising revenue.
California Governor Jerry Brown today signed a set of budget bills which include at least $4 billion in “smoke and mirrors” revenue. This includes $195 million falsely listed as “estimated revenue” from enactment of an “advertising nexus” law, which uses advertising on California web sites as a “hook” to force out-of-state advertisers to collect California sales tax on purchases by Californians.
I agree with the concept — Amazon and other out-of-state retailers should collect California sales tax — but I also know that this law is unwise, ineffective, and unconstitutional:
- It’s unwise because it forces hundreds of out-of-state retailers to end their advertising on California web sites;
- it’s ineffective because it won’t collect any new sales tax revenue; and
- it’s unconstitutional because it directly contradicts a U.S. Supreme Court ruling (Quill) invalidating similar laws.
As each state enacts this law, Amazon and hundreds of other out-of-state retailers terminate all performance-based advertising relationships with in-state web publishers. Amazon told California legislators that it would do the same in California. Today, Amazon did exactly what it promised, terminating its advertising relationships with 25,000 California web publishers. Amazon will now pay those advertising dollars to publishers in other states and countries.
I’m now re-generating all 2,030 pages of the LessonIndex.com web site to reflect the loss of Amazon’s paid advertising.