Tuesday Report - July 25, 2000

The weekly newsletter for everyone interested in barter--the world's most versatile business tool!

July 25, 2000

In this week's report. . .

Dot.coms utilize barter strategy
Executive traded for warrants
Here and there. . .

Barter Increasingly Important In Dot.com's Marketing Efforts

Need to get brand exposure while conserving cash? The dot.com corporations are covering that base by bartering more than ever, in their efforts to lock-up advertising.

According to Jupiter Communications, 15% to 20% of all overall online ad spending is done by using some form of barter...in 1999 that was $500 million of the $3.2 billion in ad spending online.

A blockbuster trade which occurred last year between Hollywood.com and CBS reinforces the value of such bartering strategy. Cash-poor Hollywood was able to lock-up $100 million in advertising across CBS's broadcast, cable, and radio stations (over seven years) in exchange for a 30% equity stake.

The deal benefits CBS because it gives the media company access to an online entertainment content and a promotion partner. In addition CBS gets less expensive stock, which could turn into a huge upside return in the future. (CBS has similar multiyear deals with SportsLine and finance-oriented MarketWatch.)

While negotiating the barter deal with CBS, Hollywood.com also struck a joint venture effort with Florida Championship Wrestling (FCW).

That barter effort will allow FCW's expansion of BeachWrestling.com, with Hollywood.com taking a 50% stake in exchange for hosting, producing, marketing, and webcasting FCW events on Hollywood.com and its related properties.

Barter agreements such as these are only limited by the imagination of the participants. While advertising for equity is often the norm, in the latter example, for instance, FCW gets exposure while Hollywood gets content plus another brand to market.

Release and Trade. . .Another Way To Wealth

If your company has a top flight executive under contract, and another firm is desperately wanting to hire that person, the payoff could be extraordinary.

That's what General Electric found out when Conseco, the beleaguered insurer, asked GE to release Gary Wendt so he could become their new chairman and CEO.

In exchange for releasing Wendt from a non-compete contract GE received an incredible compensation in the form of a warrant for 10.5 million shares of Conseco common stock. (The exercise price was $5.75 a share, while Conseco stock sells for about $10 a share.)

Here And There. . .

Network Commerce, which recently acquired Ubarter.com, reports they are registering over 25,000 members per day...up from 5,000 per day three months ago.

Network Commerce now has 2 million registered members. And the company's web properties were ranked No. 16 (with 13.8 million users overall for the month of June) by PC Data Online, an internet tracking and research company.
The U.S. Interior Department is bartering 107,000 acres of federally-owned wildlands in Utah to that state's School and Institutional Trust Lands Administration for 106,000 acres owned by the Utah agency.
BarterAsia.net is taking aim at the b2b market in that part of the world. BarterAsia is a division of Asia4Sale.com, which recently signed an agreement with the World Chinese Merchant Mutual Aid Union Association to promote e-commerce within China. The WCMMAU has 200,000 members in Taiwan and China.
Thirty-six-year-old baseball star Jose Canseco has bartered his 12,000 square foot, 10-bedroom, 8-bath, $3.5 million Fort Lauderdale home for stock in an undisclosed company.
A bullish sign for online bartering is the fact that more and more people are banking online. Almost 10% of U.S. households, nearly 10 million families, are doing so. That number is expected to more than double during the next four years, according to International Data Corp. in Framingham (MA).
$180 million in high bandwidth network capacity was recently traded in North America between Global Crossing Ltd. and 360networks Inc.
Interesting coincidence... Founder Steven White and Alan Zimmelman, who worked at Ubarter.com, both retired from the company March 31 upon its acquisition by Network Commerce. Both have recently bounced back into the barter business.

White is taking over as Senior V.P. of Seattle-based Ubarter.com, whereas Zimmelman has been named Senior V.P. at Business Exchange International (BXI) in Burbank (CA), effective August 1.
BigVine reports that they are now offering Delta Airline tickets on selected domestic flights to their members.
Privately held Mulix.com has announced the beta launch of TrustedNet which will allow small businesses to buy, sell, and barter professional services within a "trusted network" of business partners. After listing the services small businesses have to offer and services they seek, Mulix finds a suitable match. Once members decide what they need, they can then make the choice online to purchase these services or barter for them.

We welcome your comments, questions, and observations.

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