Earlier this week I received an email from a reader who was very upset with how affiliates were being treated when Buy.com launched its new Yub.com shopping site on February 16. He claimed the advertisements for Yub.com were plastered all over the Buy.com site and they were effectively stealing the traffic affiliates send to Buy.com without compensating the affiliate. He called it “one of the most serious leaks” he has witnessed.

Yub.com (Buy.com backwards) is billed as a virtual mall where consumers can benefit from the sharing of opinions in an environment driven by social interaction. It is a combination of the popular trend of social networking (think Friendster.com) and online shopping.

Developed by some Harvard University grad students and subsequently bought by Buy.com in late 2003, it works like this: members of Yub can meet each other and shop in Yub’s virtual mall, which includes over 2.5 million products from partner retailers.

When members hang out on Yub, they can interact with other members, make friends with people they trust, and share product insight and recommendations. Basic membership in Yub is free and rewards users with 1 percent cash back on every item that they buy. When users buy something that is endorsed in a friend’s profile, Yub also gives the friend 1 percent cash back, as a thank you for the recommendation.

Yub has also created a premium program for more avid shoppers, called YubClub. Members of YubClub can earn up to 15 percent cash back every time they shop and Yub still gives 1 percent to the recommending friend. YubClub premier membership is currently priced at $19.95 a year.

The reader who emailed me was so incensed by how affiliates fit into this equation that he removed all the links and references to Buy.com from all his websites. I heard from others who were either taking the same action or thinking about it.

A couple of affiliates that contacted me expressed their displeasure at how the Yub.com situation was handled, but also went on to praise Overstock.com for doing a great job of including and rewarding affiliate when it launch its auctions back in September 2004. Several noted that a customer sent to Overstock.com that signed up for auctions would be credited to the Overstock.com affiliate. “Bravo, that is the way it should be done. This is a great example of how to launch a new service while keeping your affiliates in mind,” one reader said.

Buy.com must have gotten the message. To their credit, Buy.com acted quickly to settle the nerves of its affiliates. They sent out a letter to each affiliate detailing a new month-long promotion that offered a $5 bounty for each new customer referred to buy.com that makes a purchase within 14 days. Also, starting on Monday, February 28th, any affiliate-referred visitors to Buy.com will not see our “More Stores” tab or any advertising for Yub.com, the letter stated.

When I phoned the guy who originally sent me the email, he seemed pleased by Buy.com’s most recent steps to rectify the situation but still thought the “backpedaling” was due to affiliate pressure and viewed the launch as “very poor.”

I expect to see more missteps in the future as new programs and new methods of marketing appear on the horizon. But as long as affiliates continue to add value to the process and are willing to take a stand they will be rightfully rewarded for their efforts

Start blogging and let me know what you think.