The Affiliate Myth

amazon affiliate myth Once upon a time, the online world known as the internet was such a new idea that very few people knew it even existed. People used it to publish and share important data and communicate between computers. Then, some bright computer developers invented software that would make it easy for everyone to use the internet … and then others invented ways of putting pictures on the internet. By the early 1990s, the internet was a fabulous world of visual communication that connected people all over America. Then someone said : “let’s use the internet to SELL STUFF… !” and the internet changed forever.

The word spread like wild-fire : “You can get rich on the internet — it’s easy!” Several bookstores began selling their books online, and a whole new market opened. Brick and mortar stores suddenly discovered an ocean of new customers … but one enterprising entity decided to open an internet-only bookstore. It was brilliant!

Unlike brick-and-mortar stores, this new entity, known as Amazon, had no way of attracting customers. They could do advertising, but that was very costly. These folks were not only crafty, they were very greedy. They needed a way to spread the word throughout the internet very quickly without paying for it. So, they invented the “affiliate” program.

In this program, anyone with a web page could register and become an affiliate — and thus, become rich on the internet by earning commissions for selling Amazon books. It was a brilliant scheme.

In the weeks and months ahead, word spread like far and wide. People who had no reason whatsoever to have a web page were suddenly getting web pages just to become rich with affiliate programs. They would attract their own readers who, in turn, would click on the button to buy books, and they would become rich along with Amazon. In less than a year there were millions of Amazon buttons all over the internet, producing billions of clicks, sending billions of people to the Amazon web site.

Some popular web sites began to really rack up the sales. The more popular the site, the more clicks would go to Amazon. Books (now, along with other merchandise) were selling like never before. Small web sites were making hundreds of dollars each quarter in sales through Amazon!

THE NEWS SPREAD

It didn’t take long for thousands of other web businesses to see that Amazon was making hundreds of millions of dollars off the small bottom-feeder web sites. Suddenly everyone and their brother were offering “affiliate” programs. An entire new industry was spawned and begin to grow and rise up from the swamps of the internet — ad-click providers, and affiliate-fulfillment syndicates. Now, everyone could become rich just like Amazon! Within weeks, tens of thousands of web sites around the world became peppered with affiliate buttons — like hookers at a Texas rodeo!

Up there in the ivory tower of Amazon however, there was trouble brewing. Amazon didn’t like what was happening. All these billions of dollars of sales were producing millions of dollars of commissions to millions of web owners. Amazon thought “I’ve got to do something to stop this — why should we pay these people so much money just to send customers to us? We’re already so big we don’t even need them any more.”
Thus the myth of the affiliate program was born.

Affiliate programs are myths

The first thing Amazon did was open its online commerce engines to other merchants. Amazon would turn the tables and now begin making commissions on everyone else’s online sales. They would also allow individuals to SELL their merchandise back through Amazon’s wildly popular shopping site. Another BRILLIANT idea.

As shown above, Amazon put the “Used” button right next to the “New” button. Now, they didn’t have to pay a commission to their Affiliates because customers would click the “Used” button. After all, who wants to pay retail when they can buy “almost new” for a fraction of the cost. Yet, Amazon still made their commission on ‘used’ and ‘new’ third-party sales. Suddenly the bottom drops out of affiliate sales.

Millions of web page owners who had helped start Amazon were now making nothing. Weeks and months would go by with little or no commissions. One web owner we know sent 17,000 readers to Amazon just to make $36. But that’s not the end of the story . . . Amazon STILL was paying out too much. So, they began changing their policy agreements with all their affiliates . . . this came yesterday :

Quoting  begins Dear Amazon Associate,

We’re writing to tell you about several important changes to our Operating Agreement, including revised advertising fee rates. All of these changes will be effective July 1, 2012.

We will be changing rates for the following product categories within the Amazon Associates Program:

* Magazine Products sold on Amazon.com will increase to a 25% fixed rate from a volume-based rate of 4 – 8.5%

* Grocery Products sold on Amazon.com will move to a 4% fixed rate from a volume-based rate of 4 – 8.5%

* MYHABIT will move to a fixed rate of 8% from a fixed rate of 15%

* Industrial Products sold on Amazon.com and all Products on AmazonSupply.com (previously known as SmallParts.com) will move to a fixed rate of 8% from a fixed rate of 15%

For more information on the upcoming Operating Agreement changes including a comparison of the advertising fee rates visit affiliate-program.amazon.com.

We appreciate your continued support and participation in the Amazon Associates Program. If you have questions, please visit the Advertising Rate Change FAQ at Associates Central.

Sincerely,

The Amazon Associates Program Quoting  ends

Amazon affiliates just had their commissions cut in half. So, if an affiliate was averaging $35 per month, they’ll now be averaging $15 per month — and that ain’t getting rich.

This could even spell the end of affiliate programs all together. Most other vendors will probably change their programs to mirror Amazon. The internet is now so well ingrained in society as a shopping source, affiliate programs are no longer needed. Setting up and maintaining an effective affiliate presence on your web site takes far more effort and resources than the program will typically ever pay. And, like Amazon and Google, if there’s a way they can start paying you less, they will.

The Myth doesn’t stop here

Folks, the Affiliate Myth story goes on. In our next installment to this story, we’ll look at the Google AdSense myth, and like Amazon, it doesn’t have a happy ending. Tune in next time . . . and . . .

…thanks for reading . . .

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