TechFlash: Seattle's Technology News

It may not be the stuff of tabloid headlines, but Amazon.com and Target could be headed for splitsville, according to new research report. For years, Amazon.com has run Target's website, even as it's lost other big enterprise customers like Toys "R" Us and the Borders book chain. Now an analyst is questioning the long-term prospects of the Amazon-Target relationship.

As states grappling with budget shortfalls try to force Amazon.com to collect sales tax, the online retail giant is systematically retaliating. The latest target is Hawaii. Amazon sent a note to its Hawaii-based affiliates informing them they will no longer earn commissions starting today. The company is cutting off affiliates in states that are trying to classify Amazon as a physical retailer -- required to collect sales tax -- based on its connection to locally based affiliates.

Seattle's biggest online retailers are upping the ante in their game of chicken with cash-hungry states. Today online diamond retailer Blue Nile joined Amazon.com in ending its affiliate program in Rhode Island (both companies have cut off affiliates in North Carolina as well). Affiliates link to retailers like Blue Nile and Amazon for a sales commission, and play a role in driving ecommerce business. But as cash-strapped states across the country look to classify online retailers as physical retailers through their work with local affiliates -- and force them to pay sales tax -- Blue Nile and Amazon are pulling the plug on the affiliates.

Barnes & Noble is playing a rapid game of catch up to Amazon in the Apple App Store. The big brick-and-mortar bookseller came out with an application for the iPhone and iPod touch today that lets people browse and buy books, DVDs and CDs -- much like Amazon's shopping app for iPhone. Barnes & Noble's app also has a feature that lets people snap a photo of a book cover with their iPhone camera and quickly get product details and pricing. That's a lot like what Snaptell does -- a company that Amazon just acquired.

Amazon.com isn't the only ecommerce company cutting ties to affiliates over state sales tax legislation. Online diamond and jewelry retailer Blue Nile has ended its North Carolina affiliate program over pending legislation there, TechFlash has learned. Blue Nile's move comes after Amazon took similar actions in North Carolina and Rhode Island. Amazon and Blue Nile are seeking to avoid efforts by states to classify them as a physical retailer -- and require them to pay sales tax -- through their relationship to locally-based affiliate websites.

Just days ago, Amazon.com ended its North Carolina affiliate program over sales tax legislation in that state. Now the online retail giant has cut off its Rhode Island affiliates as well. Amazon is fighting efforts by a variety of states to force it to collect sales tax on the basis of its affiliate programs.

Can Amazon.com do for electronic books what Apple did for digital music, establishing broad control over distribution and pricing? Fast Company asks that question in its July cover story. It's an interesting read, looking at how Amazon has watched and learned from Apple's experience with the iPod and iPhone. The piece also explores how -- now that Amazon has laid the groundwork for e-books -- Apple could wrest control of that market.

For the second time in a month, Amazon.com has sold out its new electronic reader, the Kindle DX. The online retailer's Kindle DX page now gives a 4 to 6 week wait for the device. In mid-June, the DX was briefly out of stock, but Amazon got shipments going again in a few days. This isn't the first time Amazon has experienced Kindle supply issues -- the company memorably sold out the original version of Kindle in late 2008 (just as the holiday shopping season was getting underway) after an endorsement from Oprah Winfrey. Is Amazon overwhelmed by the demand for Kindles, or, as some suspect, is it keeping Kindle supply low to help generate buzz?

The death of pop music icon Michael Jackson at the age of 50 is leading to a surge of music sales at Amazon.com and other online retailers. The AP reports that Amazon sold out of its stock of Michael Jackson and The Jackson 5 CDs soon after his death was reported.  

Amazon has devoted the right hand corner of its Web site to a tribute to Jackson, linking to a full catalog of his groundbreaking CDs. And the top 15 CDs in Amazon's music store are all by Michael Jackson, led by the 25th Anniversary edition of "Thriller" and my all time favorite MJ album "Off the Wall."

Sharon Chiarella is vice president of Amazon Mechanical Turk, Amazon.com’s "online marketplace for work," which connects people who want tasks done (for example, tagging web photos or doing small bits of research) with people willing to do them, often for pennies. Chiarella, a veteran of Kodak, Microsoft and Yahoo, joined Amazon in 2007, and is overseeing the company's efforts to expand the Mechanical Turk service. She talked to TechFlash about the power of crowdsourcing, how it's being used today, and why it shouldn't be used to sell Girl Scout cookies.

Don't accuse Amazon.com of making empty threats. Just days ago, the online retail giant warned its affiliates in North Carolina that it could end its relationship with them over sales tax legislation in that state. Today, Amazon carried through on that threat, officially cutting off those affiliates because the tax bill in question is poised to pass, according to reports. It's a sign that Amazon is ratcheting up its campaign to prevent cash-strapped states from passing laws that would force the company to collect sales tax on web purchases.

[Updated with text of Amazon's termination email]

Amazon.com launched two new Kindles in quick succession this year. So what will its next electronic reader look like? How about one that works with an electronic pen? Amazon recently received a patent for an "electronic input device such as an electronic pen" that can be used to annotate paper documents and locate the corresponding digital version.

For months now, Amazon.com has been quietly cultivating the U.S. government as a customer for its cloud-computing business. The online retailer established an office in the Washington, D.C. area, hired an ex-FBI official to help lead its operations there, and recently held a training session for government IT contractors. Now comes word that Amazon has leased new internet data center space in northern Virginia to support its efforts to move federal agencies onto its cloud platform.

This is beginning to look like a game of Whack-a-mole. As cash-strapped states across the country consider legislation that would force online retailers like Amazon.com to collect sales tax, Amazon is doing its best to snuff out those efforts before they take root. The latest example is California. Amazon sent a letter Monday to Gov. Arnold Schwarzenegger and key California lawmakers (pdf, 2 pages) warning that if tax legislation there passes, Amazon "would have little choice" but to end its relationship with California affiliates.

Amazon.com has found an interesting strategy to drum up interest in its electronic readers: crowdsourcing Kindle evangelism. The online retailer runs a website called "See a Kindle in Your City" connecting enthusiastic Kindle owners with those who want to check out the device before deciding whether to buy. Amazon apparently rolled out the site last year, and it's been getting a workout with the launch of the new Kindle DX in May. It's certainly a cost-effective marketing tool for Amazon. Those willing to show off their Kindles are doing it for free.