Amazon shuts down 10-year Affiliate over domain name dispute

April 2, 2012

Strong-arm tactics, thinly veiled excuses highlight attempt to take Amazanian.com domain

This is the story of David vs. Goliath. When large corporations push the bountries of domain trademark law against affiliates, no one wins.

Such is the case of Amazanian.com, an Amazon Affiliate website designed, developed, and marketed to Amazon's millions of Amazon Prime subscribers. Amazanian's sole purpose -- to promote Amazon's brand by innovating around the process of searching for Amazon's Prime eligible items. These innovations included the ability to compare all product attributes of multiple products on a single page, the ability to sort products by total number of reviews on products, and the ability to exclude non-Prime items from search results (since implemented on Amazon.com), all in a clean, distraction-free website.

Unfortunately for the affiliate, Amazanian became a bit too successful, ranking #1 in Google for searches such as "Amazon Prime Search" and converting visitors at jaw-dropping rates. Amazon decided that Amazanian could no longer exist and not only demanded that the affiliate stop using the domain, but that the affiliate hand over the domain in exchange for token compensation. While Amazon admitted to not having the legal right to take the domain since the URL did not actually violate any of their trademarks, Amazon did try to use what leverage they had to take the domain anyway -- continued membership in the Amazon affiliate program.

The short version of the story:

The following describes in detail the process of how a long-time Amazon affiliate and brand promoter was kicked out of the affiliate program. It is admittedly long and somewhat confusing, especially the reasons given as to why the affiliate should hand over the domain. However, if you're interested in domain trademark law, how not to treat loyal affiliates, or are just bored and need something to put yourself to sleep, please read on. Or you can just go straight to the bottom line.

Amazon gets aggressive with trademarks

As early as 2010, Amazon began aggressively pursuing affiliates who owned domain names that contained Amazon trademarks in the URL like kindleboard.com and kindleminds.com. For the cost of sending out an email plus $10 compensation, Amazon began snatching up domains. As an aside, this is an interesting business model given that Amazon gets aged domains that have years of Google link-juice and back-links built up around product keywords that Amazon sells.

More recently, Amazon has expanded its net to include affiliates who own URLs that do not contain Amazon trademarks, such as Amazanian.com. Why the change in policy? Emails from Amazon have referred to the Associates Program Operating Agreement which prohibits the use of "misspellings or variations of Amazon trademarks in domain names."

What exactly constitutes a misspelling or variation? Under trademark case law, does Amazon have the right to commandeer domain names such as amaze.com, zon.com, amazonian.com, or amazanian.com? Legal counsel contact with one of Amazon's trademark attorneys confirms that the answer is no, Amazon does not have the right to take Amazanian.com. But that didn't stop Amazon from using what little leverage they possessed – membership in the Amazon Affiliate program.

Amazon delivers ultimatum

We need to you to stop using your domain immediately and transfer your content to a new site that does not violate the Associates Program Operating Agreement.

Please notify us once you have done so by using the Contact Us form available here -- https://affiliate-program.amazon.com/gp/associates/contact. As we mentioned previously, Amazon will arrange to purchase your current domain name for the initial registration price, provided that you agree not to register any other domains containing Amazon trademarks, or misspellings or variations of Amazon trademarks.

We truly value your efforts as an Associate. But your ongoing use of an infringing website and your violation of Amazon's explicit policy is confusing to our customers and unfair to other Associates.

If we do not hear from you within three (3) days, we will be forced to close your Associates account and withhold payment of all advertising fees in accordance with the Associates Program Operating Agreement.

There are three things going on here. First, Amazon would like the content transferred to an "acceptable" domain within three (3) days. Second (and more nuanced), they are threatening to withhold payment of the previous month's and current month's already earned affiliate revenue (roughly 60 days worth). Finally, Amazon states that the domain name itself implies that the website is owned by Amazon and is an unfair advantage over other Amazon affiliates.

Regarding the notion of unfair advantage, there are many other websites that also solely exist to promote the Amazon Prime program. One website in particular, huntprime.com, even ripped Amazon's exact UI, making a virtual mirror image amazon.com AND has the word "prime" in the url. Why exactly are these other websites, which contain no innovation and utilize amazon trademarks in the URL, allowed to operate?

At this point the Amazanian.com affiliate decides to move the content as requested by Amazon to a new domain, skoobella.com. Case closed, right? Wrong.

"No soup for you!"

Upon notification that the content had been moved to a new domain, Amazon sends another ominous email:

Thank you for your prompt response in this matter. We still need you to transfer ownership of the AMAZANIAN.COM domain to Amazon.com. As mentioned in our previous e-mail, we are willing to compensate you for the initial registration fees, provided that you agree not to register any domains containing Amazon brands, or a misspelling, in the future. If you wish to transfer this domain, please reply to this message using the Contact Us form available on Associates Central or by following this link:

https://affiliate-program.amazon.com/gp/associates/contact

If we do not hear from you regarding the above within three (3) days from the date of this email, we will have no alternative but to close your Associates account and withhold payment of all advertising fees in accordance with the Agreement.

Now it's beginning to feel more like a shakedown – yes, you did what we asked you to, and now we want more. It turns out that the confusing domain name wasn't really the issue after all. At this point, the affiliate offers to sell the domain to Amazon at fair market value (certainly much more than Amazon's offer of roughly $10). Simultaneously, the owner tries to open a new Amazon Associates affiliate account using the new domain, skoobella.com, in an effort to both appease Amazon and to adhere to the Associates Program Operating Agreement.

Clues begin to emerge

We completed our review of your application to become an Amazon.com Associate, which included a visit to the Web site where you planned to create links to our store.

After careful consideration, we have decided that your site may not present a mutually beneficial business opportunity. We have therefore decided not to approve your application to become an Amazon Associate. Your new Id has been rejected.

Accordingly, we have closed the account under which you had been temporarily approved and that approval has now ended.

Also, the synopses and reviews posted on our site are reprinted by Amazon.com with permission from the originators. We actually pay for this privilege. Each is the copyrighted property of some other source, and we do not have the right to pass along reproduction permission to our Associates.

Please understand that the purpose of posting reviews is to put your own unique stamp on your book or music selection. If every Associate who lists a certain title makes no personal comment about the selection, then there exists little or nothing to differentiate one site from another. If your recommendations come from your perspective, then your visitors will recognize the style and voice as your own and, we believe, be more likely to take your advice and buy the book. Its your expertise, after all, that brought them to your site in the first place.

Ignoring for the moment that the previously stated website usability differentiators were carried over from the old website to the new one, Amazon claims that they actually pay for reviews on Amazon.com. Not sure how payment is issued under this program, but it would help explain the great number of reviews written for products sold on Amazon.com. Let's file this one under the "grey" business practices like in which financial period to recognize deferred revenue.

Further, all reviews displayed on the affiliate website are directly accessed from Amazon's Affiliate API. If Amazon does not have the right to pass along reproduction permission to their Associates, why are the reviews available via the API at all?

Thinly veiled excuses

Amazon declines to purchase Amazanian.com, citing the precedent it would set if they purchased a domain that they view as theirs anyway (even though their own trademark attorney agrees otherwise). The owner then informs Amazon of his intent to sell the domain in the open market, hoping that by not using or even owning the domain that he would then be in compliance with Amazon's Associates Operating Agreement. The response?

Thanks for the recent phone conversation about (owner's) domain AMAZANIAN.COM and our Associates program.

Sorry, but if (owner) would like to remain in the Associates program (using a new domain, such as SKOOBELLA.COM), he'll need to transfer the domain AMAZANIAN.COM. As I mentioned, our Associates Program Operating Agreement does not allow Associates to use domains containing any of our trademarks or confusingly similar names. It's not fair to other Associates and, especially, it's confusing to customers, who might mistakenly believe they're visiting an Amazon site. To be reinstated in the program, we also require Associates to transfer to us the problematic domain(s).

Under our policy, we reimburse only for the domain's original registration fee. Obviously, if we didn't, Associates could register a variety of confusingly similar domains and then try to profit from the subsequent transfers.

Amazon paves the road

On February 2, 2012, Amazon significantly changed their Affiliate Operating Agreement to read: "Any dispute relating in any way to the Program or this Operating Agreement will be resolved by binding arbitration, rather than in court ...". It goes on to say that:

We each agree that any dispute resolution proceedings will be conducted only on an individual basis and not in a class, consolidated or representative action. If for any reason a claim proceeds in court rather than in arbitration, we each waive any right to a jury trial. We also both agree that you or we may bring suit in court to enjoin infringement or other misuse of intellectual property rights.

Here Amazon is protecting themselves from both class action lawsuits and jury trials resulting from disputes regaring the Affiliate program. This paves the way for Amazon to make dramatic changes in the way that the Affiliate program is operated. Are they preparing to eliminate the Amazon Associates program altogether?

The bottom line

Why exactly is Amazon so intent on gaining ownership of Amazanian.com that they would sack an affiliate who has promoted their brand for 10 years? Here are several admittedly speculative possible reasons.

Search Engine Optimization

Amazon Prime Search results
skoobella.com, like amazanian.com that it replaced, ranks #1 for "amazon prime search"

It takes time, effort, and SEO knowledge to get any web page to rank #1 in Google for a particular search term. As you can see above, skoobella.com (and amazanian.com before the content was moved over) ranks #1 for the "amazon prime search" term. Amazon has several entries on the first page results for their Askville property, but none for their primary website. Obtaining Amazanian.com would give them instant top placement on several Amazon Prime related search terms.

A Precursor to Larger Changes

Given that Amazon has recently protected themselves from both class action lawsuits and jury trials regarding disputes with the Amazon Associates program, Amazon may be planning broad changes to the affiliate program. For the past couple years, each update to the Associates API has reduced both the types and amount of data available to affiliates, and the data returned by the API often contains inconsistencies and omissions surrounding new and popular items for sale on Amazon.

Trademark Case Law

Trademark and Patent lawsuits have become a revenue stream for corporations, giving rise to the term "cashectomy." Current case law does not support Amazon's right to commondere websites like Amazanian.com, but Amazon may be trying to set a new precedent.

Financial Stress

Market expectations, rising gas prices, and falling Prime membership are all possible pressures on Amazon's bottom line which could result in an across the board effort to cut costs. Marketing is often the easiest funding bucket to cut for corporations as doing so may not directly affect current operations. Unfortunately, cutting marketing expenses usually has dramatic long term effects if funding is not restored in a timely manner. In this case, cutting affiliate payments may result in removing a revenue stream that can not be recovered.