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February 1, 2000

In this week's report. . .

  • educates young barterers
  • Former Microsoft CFO trading for fiber-optics in Europe
  • Musicmaker brings in big profits for EMI
  • Here and there
  • Follow-up on previous articles


Idealab Will Educate "Young Barterers" Through

Major Marketing Campaign Underway February 15th

Kids 8 to 18 will soon be able to trade their old Play Station games, unwanted Beanie Babies, and other items with their peers on the internet...over

A massive marketing effort will soon be underway where, on popular radio stations across nearly 70% of the country, kids will hear about "the ultimate trading place for today's generation." Television spots will be seen on reruns of the Simpsons, as well as on Nickelodeon.

Online, is purchasing keyword searches from a number of major portals, including Yahoo and AOL, and deals with regulated kid-specific Pok?on collector pages, for example.

Trades are free, but will begin charging each trader a 77-cent flat fee in April. To keep kids coming back for more, a loyalty currency is in development. Kids can earn online points for making swaps and they can trade or spend the currency at advertisers' sites. To use the service, minors must register using their parents' credit cards.

Former Microsoft CFO Bartering

Greg Maffei, former Microsoft CFO, left Bill Gates last month to take over as CEO of Worldwide Fiber, Inc., located in Vancouver (BC). And it didn't take him long to put his barter hat on!

He has already completed his first deal by providing Sweden's state-owned Telia with an 8,700-mile North American network that connects 17 major U.S. cities.

In return, Telia is providing Maffei's company with fiber-optic facilities that cover 4,000 miles in the United Kingdom, France, Germany, and other countries connecting eleven major European cities.

Reportedly, Maffei made the trade because construction costs are higher in Europe and this was the most expedient way to establish positioning on that continent.

EMI Barter Agreement Figures Big Profits Of Company

The British record company EMI, recently acquired by Time Warner, unexpectedly announced a 31% surge in its operating profit for the latest six-month period...thanks to barter.

How did they achieve such a fabulous gain? EMI realized a quick $40 million in operating profit by selling part of its equity stake in during the online company's first trading day last July on NASDAQ.

And in a matter of minutes, the transaction generated four times what EMI earned selling CDs and tapes in the U.S. during the first half of its fiscal year.

Barter Deal Pays Off Big Time!!

Last summer EMI, the music giant, struck a lucrative barter agreement wherein Musicmaker traded a 50% equity stake in its online start-up just two weeks before its July public offering. In exchange, Musicmaker, which offers customized compilation CDs via the Internet, was granted access to a large portion of EMI's recorded music catalog. On's first day of trading EMI sold 3 million shares, 10% of its stake, at $14 per share for a net profit of $40 million.

Here & There

  • Actors Antonio Banderas and Woody Harrelson are trading their high up-front salaries in exchange for an equity position in writer-director Ron Shelton's new boxing movie, Play It To The Bone.

  • News Corp's 20th Century Fox Television just negotiated a huge barter deal with David E. Kelley, the lawyer-turned-TV-producer behind the hit shows, Ally McBeal and The Practice.

    His 6-year deal not only provides guarantees and bonuses, earning him at least $20 million a year, but he will have a substantial piece of the back-end or rerun money from his shows. He gets an unprecedented 50% of the rerun money the studio will make when it sells his shows both domestically and abroad. (The previous high for a top producer was 35% of the rerun money.)

  •, which acquired a month ago, has announced the signing of an exclusive agreement with, which will enable them to provide an additional service to the division. As one of the largest business-to-business portals, it features 500,000 business suppliers, partners, and services in 175 international markets.

  • Bullish sign for barter: The U.S. is more vulnerable to the whims of foreign investors than ever before. In the past decade they have doubled their holdings of U.S. Treasuries...they can now determine the fate of the dollar, and interest rates.

    If foreign investors dumped their Treasuries, the dollar would fall...perhaps precipitously. Fed Chairman Alan Greenspan would then need to raise rates to entice buyers back into Treasuries. However, higher rates could create havoc in the stock market and mean the start of a recession...a bullish sign for barter.

  • Barry Diller's USA Networks traded its internet shopping network to web retailer In turn, Networks gets a 75% equity ownership position in Styleclick, a network now valued at approximately $500 million.

  • BankOne's $1.8 million sponsorship deal with the University of Michigan includes a barter sweetener...BankOne officials will make trips to future bowl games on the team plane, as well as getting hotel rooms at the team hotel.

Follow-up From Previous Issues...

September 21st Issue:, a Los Angeles-based online barter company, which made a splash at the Los Angeles Times Small Business Strategies Conference, reports a doubling of its membership base in the past month. Funded by Tim Draper's Zone Ventures, Lasso has recently recruited four people from diverse industries to its advisory board.

December 28th Issue: opened for business Christmas day, December 25th so people could exchange presents. They recently were offering to barter two Super Bowl tickets online.

January 11th Issue:, located in Hamburg, Germany, reports that 1,000 companies have registered prior to their official launch. The company also says it will launch an English language version within 60 days. CEO Christoph Linkwitz believes tomorrow's market is all about trading on the internet at flexible prices, and he aims for Ricardobiz to be the best and most efficient online trading organization in the world. They now offer nine different trading floors and formats including traditional auctions, reverse auctions, and bartering services.


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