In 1997, Amazon.com launched the concept of affiliate programs into prominence (they weren't the first, but they were the first to do it big-time!). For the one person on the Net who doesn't know, Amazon sells books (and tons of other merchandise now) online... and only online.
Books, of course, offer information on millions of different specialized subjects. And there are millions of Web sites out there, on an incredible variety of subjects.
So Amazon figured, "Why not convert those sites into specialized, niche book shops for us? We'll pay a commission when a site refers a customer who buys a book."
And that's how Amazon started one of the first affiliate programs (AKA associate or referrer programs).
Here's how an affiliate program works, using Amazon as the example...
The affiliate provides links from his site to certain books on the Amazon site, books that are related to the affiliate's site content. Amazon uses special software that tracks who sends each visitor. If and when the visitor buys, Amazon pays the affiliate a commission.