Thursday, September 8, 2011

Internet Sales Tax and Amazon Cuts A Deal

The threat of a sales tax on internet goods may have gotten a short term reprieve. "Under the deal, Amazon would delay collecting taxes until September 2012, Assemblyman Charles Calderon (D-Whittier) said." Certainly good news for this holiday season, but it seems inevitable that a tax-free internet won't stay around for long.

The article also mentions what Congress might do. "If Congress acts by next summer to settle the contentious issue of how online retailers should be taxed, that decision would override Amazon's deal with California." How quickly Congress acts is always questionable and I wonder how best to divvy internet revenue. Would Congress use this as the first level for a national sales tax? Would a portion of those revenues than be divided across each state? And would an internet sales tax help our deficit or simply stop consumers from purchasing goods, a far worse outcome to be sure.

What is happening in California is most certainly expected to play out in every other state as well. And that will certainly be played out on the national political stage with a Presidential election coming next year.

Some Suggest Content Is Not The King Anymore

With all the news at Yahoo, questions arise whether content is no longer the king and that those that "point to it" are more valuable. "Internet pioneers Yahoo and AOL Inc. are losing out to Facebook Inc. and Google Inc., both of which are adept at helping point the way to pertinent or interesting material." To me, it sounds more like the chicken or the egg theory. Facebook and Google need content to point to and Yahoo and AOL need content to be clicked. An almost symbiotic relationship that needs to be maintained. It also suggests that content companies are better served when they are ahead of the curve when it comes to distribution platforms.

In Yahoo's case, the push for content overshadowed the changing platforms toward mobile and social media. Certainly AOL and Fox tried with Bebo and My Space respectively, but were unable to capture an audience. Yahoo, unfortunately, seemed to remain on the sideline. Google has successfully embraced content with You Tube and the rumors of a Hulu acquisition. And Facebook has made deals with Zynga and movie studios to sell content.

I disagree that Content is no longer King. But content creators need to make distribution deals that reach consumers where they want to be. The rise of tablets is a clear example that consumers seek mobility. Twitter and Facebook demonstrate that consumers like to share information. Content then must be reshaped to fit into these new platforms. One last example...Amazon is already hard at work redoing their website for easier viewing on the iPad. Content needs distribution, but distribution also needs content.