Even though I’ve made fun of their airport ads, Zappos absolutely knows how to sell shoes. Now, according to Business Week, it’s hoping to profit from people’s fascination with its friendly, antics-filled business model.

After all, if an entrepreneur creates a successful business, why not sell the concept to other entrepreneurs interested in starting up new ventures? So, last summer, they began holding two-day, $4,000 seminars on how to recreate the essence of its corporate culture.

Want a preview? Take a look at Tony’s Hsieh’s presentation deck on “Delivering Happiness” from a recent Tony Robins Business Mastery event.

Some of Zappos employee policies, as outlined in the article include:

• Call center operators’ initial salary is $11.00 per hour.
• There are no employee bonuses.
• There are no 401K matching contributions. Hsieh believes productive employees derive the most satisfaction from helping their customers.
• Customer service employees enjoy plenty of freedom—and latitude in doing their jobs. They can spend hours servicing one customer—even directing them to competitors’ web sites. Whatever it takes to satisfy the customer’s needs is job #1. Having fun while doing it is part of the job.
• Over 95% of Zappos transactions occur online, so phone calls to customer service reps are viewed as opportunities to connect with consumers and “wow them” according to Hsieh.
• Top priority: to establish emotional connections with the customer.

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The Governor of the State of New York wants to address their $15 billion deficit by taxing, well, almost everything. Among the specifics is the taxing of digital downloads. The so-called “iPod Tax” would be 4 percent on all music and video downloads.

For years, we’ve been waiting for the axe to drop on e-commerce by the issuance of taxes on internet-based sales. The arguments against it (and there are many, as there should be) include complexity (which state charges what rate for what type of item, and if states, why not counties and cities?), the cost to revamp shopping cart software and accounting practices, and the obvious fact that government really doesn’t need to tax everything.

What is interesting about this specific tax proposal is that it will also include pornography. Opponents of the tax argue that taxing such a thing legitimizes it. The government would profit from porn.

This is not new. Sin taxes have been around for a very long time (ask a smoker). Inevitably, the argument for a sin tax is the very thing that ultimately dooms it: diminishing returns due to reduced use of the product or service. The state gets hooked on the juice from it, then when it falls off, the tax rate increases. This then accelerates the drop-off in use, and there we go down the spiral. The people who adopt such tax policies aren’t very bright. But of course, you can pass any tax as long as it’s For The Children.

With every state in some measure of financial turmoil, any hope of keeping the tax hounds off the net will likely fail, and soon. What remains to be seen is how complex and unwieldy the new system of internet taxation will be, and just how far states will go to establish “nexus.” Can you really do business in a state you’ve never entered, and what would this mean for international jurisdictions?

In what can be compared to finding the Holy Grail, the results are in for Monty Python’s efforts to encourage their legion of fans to refrain from supporting illegal uploading of their work onto the internet and buy Python DVDs. In a previous article, we described how Python was building their own YouTube channel, which will feature premium-quality versions of their sketches in order to promote their DVD sales. Their approach was simple: instead of getting angry and launching Inter-Continental Ballistic Lawyers, the guys decided to give out high-quality samples, hoping people would be as hungry as Mr. Creosote in a sweet shop for more.

Well, it worked. Frightfully well.

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This is your invitation to attend a free webinar on the recent Tiffany v. eBay ruling and its impact on brands of all sizes, and those of us who support and promote them. (Since this event has already happened, please follow this link to listen and view the recorded event in its entirety, or hear other events.)

On Thursday, October 2nd, I’ll be in New York moderating a discussion between two of the most expert and engaging voices in online law. Since this will be live, we’ll be taking questions from attendees, so I hope you can join us.

You can look forward to hearing the perspectives of Martin Schwimmer, the host of The Trademark Blog. Last year I enjoyed hearing his presentation on Trademarks and the Internet.  My employer, Thomson CompuMark, is delighted that he’s able to join us again.

You can also look forward to the expert views of Oren J. Warshavsky, who will join us from the firm Baker Hostetler. If you enjoy this blog, you’ll likely want to read his thoughts on the expanding right of publicity.

While you may pose questions during the event, you can also email me on what you’d like to hear about, and I’ll gladly share your requests with the speakers. I hope you can attend, and will post an update closer to the webinar.

I’ve previously blogged here about the economics of scalping, and my belief that anti-scalping laws prevent beneficial markets. So, I’m glad to see Stub Hub win a case which sets a precident for it to receive protection as an online service.

In January a class action law suit was brought against Stub Hub and its owner eBay. The complaint’s gist was that Stub Hub and its owner eBay profited by and encouraged scalping, which is a criminal offense in Oregon. The class of “disappointed fans” sought damages based on the increased price of tickets created by the secondary market which Stub Hub has built.

Judge Marilyn Litzenberger ruled that the claim was not supported by Oregon law, which does not provide civil penalties for scalping. Then she further ruled that Stub Hub would be immunized from scalping liability due to the Communications Decency Act’s Section 230 “safe harbor” provision for internet service providers.

Judge Litzenberger’s extention of Section 230 protection to Stub Hub will certainly be cited in future cases. It may also encourage franchizes to create their own secondary “fan-to-fan” markets, and for media outlets such as ESPN to partner with Stub Hub.

A recent Supreme Court ruling has emboldened manufacturers of goods ranging from baby food to clothing to set minimum pricing requirements of their distributors. The case has inspired protest from most states’ attorneys general, as well as economists who identify such agreements as a cause of inflation.

The Wall Street Journal’s political blog reports:

Attorneys general from 35 states — including New York, California, Massachusetts and Pennsylvania — wrote to Congress urging passage of a law to make policies like these illegal. “As the chief antitrust enforcers in our respective States, we know all too well the harm that can be caused” by pricing pacts, the letter says.

Such agreements are often particularly targeted to disadvantage online retailers by regulating the minimum advertised price. This allows bricks-and-mortar stores to discount prices further in person, while forcing public websites to post only the higher, manufacturer-determined prices.

A Creative Response Sends Sales Soaring
West Coast Golf Online was hemmed in by exactly this kind of minimum advertised pricing agreements. Their online store had to list the higher prices, while stores discounted these prices in person. Their answer was to create “The Haggle Button” and to post it right next to the manufacturer’s price.

Though customers were reluctant to call and demand a discount, they were willing to press the button, which automatically triggered an email to be sent with a lower-priced offer. In Marketing Sherpa’s post the retailer attributes this technique to driving an increase to their annual revenue of 685%. (How’s that for a first mover advantage?) The haggle button also drove word-of-mouth excitement among customers, who emailed their friends and increased the store’s site traffic dramatically.

As state real estate and income tax collections head downward, tax collectors have turned their gaze toward online commerce. At the same time, a few states are emerging as havens from taxation.

New York Goes After Affiliate Marketers with the Amazon Tax
New York implemented the so-called Amazon tax. It seeks to change the common interpretation of online tax law, which holds that states don’t have jurisdiction to force sites to collect taxes unless the site has a sufficient presence, or nexus, such as offices or employees, in the taxing jurisdiction.

The New York legislature voted that companies running affiliate marketing programs should be considered as doing business in the jurisdications affiliate websites are operated from. This idea of affiliate liability stretches though issues such as online tax and liablity for trademark infringement by affiliates. Amazon and others are in court fighting this, but New York’s actions have forced many e-commerce sites to start collecting taxes.

Taxing Music Downloads: The iTax
Five states have already levied iTaxes to tax downloads: Nebraska, Tennessee, Indiana, South Dakota, and Utah. Eight states in all have proposed such taxes this year, while others, such as my home state, Massachusetts, are considering this as one way to overcome revenue shortfalls. This failed in California, but expect a second attempt at taxing iTunes later this year.

Of course, like New York’s online taxes, the problem lies in compelling out-of-state websites to collect taxes for the state or municipality.

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Valuing brands is the alchemy of advanced financial theory, but now one company is valuing domains—and you can take it to the bank.

Thirty-three-year-old Rick Latona and his partner, attorney Matt Collins, may be the first ever digital pawnbrokers. Latona, in fact, was a real-world pawnbroker who now owns 11,000 domains.

The guys loan up to $100,000 for domains, for which they become the registrant of record while clients keep their DNS records, so their site is unaffected. Even cooler, they have partnered with domain appraisers to automatically extend the full value of appraisals as pawn loans.

Considering the tightness of capital markets, this novel venture really does stand out in its boldness and ingenuity. Perhaps your next new domain will be from a pawn shop. Lets just hope its not UsefulArts.

Judge Richard Sullivan’s ruling against Tiffany’s varied claims of trademark infringement is fairly absolute.  When word of the ruling reached the MIT Media Lab where I was speaking this week, the audience there was delighted.

The unambiguous ruling for the right of efficient commercial speech and immunization for intermediaries who take good-faith precautions and adhere to DMCA safe harbor requirements is good news for the Internet as a medium for business.

This case is part of a larger pattern of rights holders going after intermediaries for contributory liability, rather than after actual violators, who may be harder to identify and less lucrative to pursue. It’s also part of a pattern of eastern US courts supporting online advertising, and western courts supporting mark holders.

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Last year I wrote a brief analysis of why sports venues benefit by restricting ticket resale. It is hard to think of any other instance, perhaps other than land ownership, where the resale of your asset can be restricted or outright denied. Further, anything which makes honest people hide from police as if they were criminals probably erodes the force of law to our collective detriment.

Anyway, an Israeli firm, Ticket2Final, has proposed a novel online idea to sell chances to win the right to buy championship tickets at face value. They partner with the league that will hold the championship, and during playoffs they use economic models (which sounds like odds making) to set prices for customers to essentially bet on their team making the championship. If they do, they can buy tickets from the league at face value.

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