If the total gross revenue involved (before any payouts, etc) is several thousand dollars or less in a year, then in my view don't sweat it ... just report the net, which will presumably be a much smaller amount due to payouts, etc, as miscellaneous income and go from there ... you'll likely pay more tax this way, but you'll save money and time in tax preparation.
Affiliates themselves aren't the only worry ... you also have to do fraud screening of customers themselves ... that's very challenging when dealing with intangible goods - you mention DRM, so I assume you intend to sell content / software, etc through an affiliate program.
Even if the production cost is $0, refunding one's money can easily put such a transaction into the negative ... especially if many customer orders turn out to be fruadulent; PayPal "locks" accounts for too many complaints, credit card chargeback fines (some 3rd party processors will pass those fees along), etc.
I'd suggest limiting affiliates (and also customers) to various select countries (ie. U.S., Canada, U.K., etc) along with manually verifying each affiliate ... that will take time and cost some money, but should help forestall many problems starting out ... in short, ramp up the business slowly.
Ron
