Affiliate law sends e-commerce companies running for the hills.

New York residents already feel the pain of high taxes. But now the state has basically shut down many of its resident’s businesses that rely on affiliate revenue, including domain name owners.

In an effort to collect more tax revenue, the state decided that companies (namely Amazon.com) that have affiliates in the state technically “have a place of business” in the state. Thus, they are required to collect and remit sales tax on purchases shipped to New York.

What the bureaucrats in Albany didn’t think about is how companies with affiliate programs would react. I just received an email from Collectors Choice Music with the subject line “NY AFFILIATE NOTICE AND TERMINATION”. Here’s what it says:

Due to recent changes in New York law relating to the collection of sales tax, Collectors’ Choice Music, Inc. (CCMUSIC.COM) will no longer offer its products for sale through affiliates or other representatives (the “Affiliate Network”) that are residents of New York State and that are paid a commission on such sales. Accordingly, CCMUSIC.COM is hereby immediately terminating all participation in the Affiliate Network by all affiliates that are New York State residents through all performance marketing networks. A New York State resident is (a) any individual who maintains a permanent place of abode in New York State and (b) any corporation incorporated under the laws of New York and (c) any corporation, association, partnership or other entity doing business or maintaining a place of business in New York State. (See New York Sales and use Tax Regulations Section 526.15, 10 NYCRR §526.15.)

Therefore, if you are a New York State resident, your participation in the Affiliate Network is hereby immediately terminated and you must immediately cease and desist from any referrals of sales to CCMUSIC.COM and remove any links to all websites operated by Infinity Resources, Inc. and its subsidiaries, including without limitation Collectors’ Choice Music, Inc. dba CCMUSIC.COM, from your website. [The change in the law does not require CCMUSIC.COM to cease doing business with or through affiliates who simply advertise CCMUSIC.COM's products without compensation or who are paid a fixed amount on a "per click-thru" basis ("Affiliate Exemption").]

Granted, Collectors Choice Music isn’t a big e-commerce company. But if other online stores ditch their New York affiliates too, then the income of New Yorkers participating in affiliate programs will drop substantially. And that means New York won’t collect as much sales tax.

Brilliant. Simply brilliant.

What’s hot in the domain industry, and what’s not?

It’s been a few months since I wrote the What’s hot, What’s not article for domain names. A lot has changed since then, so I’ve updated the list.

What’s Hot

Geo Domains – geo domains have been a cash cow for a long time, but everyone and their mom is talking about them now. The attention will increase before July’s GeoDomain Expo.

Conference Fatigue – with so many conferences on the schedule, a number of regulars are reporting conference fatigue. I suspect the schedule will be a bit lighter next year. TRAFFIC plans to do just two shows in Silicon Valley and New York.

Cost Per Action – Good domains with high converting traffic are starting to see the benefit of CPA over CPC. Major parking companies, including TrafficZ, are adding CPA to the mix rather than relying solely on Yahoo and Google ad feeds.

Domain Sales for Cash Flow – With parking revenue down, a number of domainers are turning to another source of cash flow by selling domains. One prominent domainer told me last week that he plans to sell a couple domains a month to keep his monthly cash flow in tune with last year’s.

Hypocrites – namely Verizon.

Click Fraud Detection on Parked Domains – with ad providers and advertisers complaining of poor conversion from parked domain names, click fraud detection companies such as Click Forensics are helping to separate the good traffic from the bad.

What’s Not

eBay for Domains – eBay now requires all domain sellers to accept PayPal. Anyone who’s ever been burned on a domain sale with PayPal knows this is a raw deal.

Domain Parking – as many people pointed out at last week’s TRAFFIC show, it’s not that domain parking revenue is worse than a couple years ago. But it’s below where it was at the start of the year. Domainers tend to have a short term memory.

.Mobi – If you were in it for the short run, look to liquidate at a fraction of what you paid. If you’re in it for the long run, best of luck.

Typos, Trademarks – Need I say more?

.Asia – But wait! Isn’t Asia the fastest growing internet user base? Won’t they all starting typing .asia at the end of keywords in their browsers? Um, no.

Owners of three and four character domain names win UDRP decisions.

Owning short domain names comes with risks. They are prized domains, and many people want to get their hands on them. The owner of Ace.com recently won its case, but the assaults continue. Here are several recent cases that domain owners managed to win.

ANU.com

In this case, a company you’ve probably never heard of — Anu Enterprises — went after domain owner DomainRegistry.com.

Anu Enterprises stated “Respondent probably acquired the disputed domain name because Respondent wanted to capitalize on the fact that many companies around the world used the mark ANU. The Respondent can be found to have been acting in bad faith even if its actions are outside the circumstances listed in the Policy.”

That’s an interest complaint, because it basically states that many other companies should have rights to the domain name, too.

The panel found that the owner registered the domain in 1999, well before Anu Enterprises received any common law trademark rights to the domain and before it filed for a trademark. But it wouldn’t find Anu Enterprises guilty of reverse domain hijacking.

BDSI.com

BioDelivery Sciences International, Inc. tried to get the four character domain name BDSI.com. But it failed to prove any of the three requirements to win. The domain owner is HLK Enterprises, Inc.

The panel made good observations about generic and short acronym domain names, as well as domain parking, which should be music to domain owners’ ears:

However, based on the fact that the disputed domain name and Complainant’s mark contain only four letters that could stand for many things unrelated to Complainant’s business, the Panel finds that Respondent’s use of the disputed domain name as a portal website is a showing of rights or legitimate interests under Policy…As discussed in the previous section, the disputed domain name and the asserted mark are comprised of generic and common terms. The four letters that create the asserted mark and the disputed domain name could stand for many things that do not interfere with Complainant’s business.

XOFT.COM

Xoft Inc. lost its challenge for Xoft.com, owned by Frank Schilling’s company. Interestingly, Schilling’s Name Administration used the defense that xoft.com implies “soft porn”.

The panel found that the domain registration predated Xoft Inc.’s trademark and use of the domain.

What further frustrates Complainant’s claim to superior rights is its previous abandonment of two trademark applications for XOFT on August 20, 2003, and again on May 13, 2004. Even if Respondent had known of Complainant’s pending trademark application when it filed the disputed domain name, which Respondent denies, it would have been reasonable to suspect that Complainant might again be unable to maintain the application, quite possibly for lack of commercial use.

Name Administration bought the domain through an expired domain auction.

OTHERS

Here are a couple other cases of interest. An Italian Bank went after MPS.mobi and lost. Avio.com was also held onto by its owner.

Premium domain names will sell today in two auctions.

Domainers will spend the day entering fighting each other for the top bid: both Sedo’s Great Domains auction and Moniker’s silent auction for TRAFFIC Orlando end today.

The big name in Sedo’s auction is America.com, which is currently at $1,050,000 and hasn’t met its reserve. Diamantes.com is at EUR 250,000 and also hasn’t met its reserve. So far the highest value domain name to meet its reserve is Cognac.com at $54,500.

There are some great mid-tier domains in Sedo’s auction that have met their reserves. Katie.com is at EUR 12,000 and should escalate quickly in the closing minutes. RNI.com is at $10,099 and xtd.com and yib.com are each at $10,000. Classic.net is up to $7,200 and drumset.com is $6,100.

Remember that Sedo has a new bidder authentication system. So don’t wait until the last minute to bid if you aren’t already authenticated.

Over at Moniker a lot of domains are attracting attention:

BirthRecord.com $5890
VPR.com $10,362
MyRealty.com $3,300
553.com $11,770
AnimationShop.com $5,590
Saskatoon.net $1,325
WealthBulletin.com $2,120

After filing UDRP, owner of domain hands it over.

Last month I wrote about a UDRP arbitration request by The University of Texas, which was seeking to get the domain name UniversityofTexas.com. After The University of Texas’ Board of Regents filed the UDRP with National Arbitration Forum, owner Global Access decided to hand it over.

According to the decision, “Respondent has no desire to retain the domain name or to interfere with Complainant’s asserted mark. Respondent therefore desires to transfer the domain name to Complainant, and requests that this be done without further proceedings.”

The University of Texas asserted that the domain owner ignored its earlier requests for transfer, which is why it took the step of filing for arbitration. For its part, Global Access said it obtained the domain name in a portfolio purchase pursuant to a written agreement by which the seller represented and warranted that the domains were not in violation of the intellectual property rights of any third party. Such an agreement doesn’t protect a buyer from liability, but could allow them to collect from the original seller.

Although this was a clear cut case, it will be interesting to see if another Texas university, Baylor, prevails in its quest for Baylor.com.