Bloggers are panicking over changes to Amazon’s affiliate system

Thursday night, members of Amazon’s associates program got some urgent and unexpected news. Rumors had been swirling for weeks, but a late-afternoon email made it official: on March 1st, the affiliate rates would be changing, shaking up one of the web’s longest-running ways to make a quick buck.

“These changes simplify the fee structure,” the message read, explaining the new rate structure. “We want to reward associates that can refer sales across those categories.”

For Tracy E. Robey, who runs the beauty blog Fanserviced-b, the impact was more stark: a pay cut. With the affiliate cut for a typical purchase dropping from 8 to 6 percent, she anticipates that her checks from Amazon will go down by as much as 20 percent. For Robey, her blog is still more of a sideline than a job, but as she looks to expand her growing business, she says that drop could have real consequences.

“[Amazon‘s affiliate program] has been a really good thing for a long time for lots of people,” Robey says. “I don’t think it’s really hit yet what this means.”

 

Small-scale bloggers like Robey won’t be the only ones hit by the rate changes. Publications like The Wirecutter have built thriving businesses entirely on affiliate payments, which are made by vendors like Amazon whenever a referred customer buys a product. Though a number of companies offer similar programs, Amazon’s affiliate system is the most lucrative, and auto-tagged product links have become a significant part of many online businesses’ revenue. (That includes The Verge, which auto-generates affiliate links in some cases.) Though the relationship can be lucrative, it’s also entirely subject to Amazon’s discretion — and as Robey and others are learning, it can often change with little to no warning.

It’s hard to predict exactly what Amazon’s new rates will mean for those participating in the program, but there’s plenty of reason to be nervous. The most immediate change will be the end of Amazon’s “variable standard program fee” rates, which gave sites a higher cut as they drove more business to Amazon. The scale ranged from 4 to 8.5 percent, depending on how many products visitors bought in a given month. Robey says she never had trouble selling enough products to earn an 8 percent rate.

As of March 1st, that standard will be replaced with a new category-by-category system. That means affiliates selling products in certain favored categories will get higher rates, including “digital video games” and “luxury beauty,” while most products see a steep drop-off. Amazon says the changes were made to simplify the system and that most associates will come out ahead, although it’s unclear how to square those predictions with the falling rates.

 

Amazon has already made similar adjustments in many overseas markets. In 2015, the company moved its European affiliate program to a category-based structure, and according to the affiliate management firm GeniusLink, the result was more of a subtle chill than a freeze-out. “There’s definitely some pain as a result of it,” says GeniusLink CEO Jesse Lakes, “but we haven’t had a single client who stopped doing business because of the new payout structure.”

Amazon has long offered short-term bounties and bonuses around specific products, but the new system gives the company more power than ever to promote certain brands and categories. Affiliates hawking Amazon’s own products, like Prime Video, Prime Music, and Kindle Unlimited, will receive significantly higher rates than physical versions of the same media from traditional publishers.

Robey is particularly rankled by the distinction between “beauty” and “luxury beauty” — a difference between a 6 and 10 percent commission under the new system. Almost none of the products she covers are grouped in Amazon’s luxury beauty category, although she considers many of them luxury goods. The result is a major incentive to write about brands in the favored category, although Robey says she won’t change the products she writes about.

Still, as Amazon shifts its attention to new ventures in streaming and personal assistant hardware, many see it as an ominous sign for the affiliate program. “Amazon has done such a great job taking all their profit and dumping it back in to their business. And investors are now asking Amazon to show a profit,” says Lakes. “I’m not surprised that they’re whittling a few percent here and there.”

Source:

http://www.theverge.com/2017/2/28/14755276/amazon-affiliate-rate-changes-associate-network-fees

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