by Bob Meyer, Editor of BarterNews
Are Big BusinessA Case of Quid Pro Quo!
Trade At Highest Levels Of Government Used To Justify Spending Billions
on this way of doing business to keep you abreast of the wide range
of possibilities in the barter world. Inasmuch as we've published 10-page
articles in BarterNews about compensatory arrangements, also known as
offsets, this is just a brief look at this most interesting high-level
way deals are done.
involve foreign military sales, and sales of "big ticket"
high technology civilian products and services, i.e. fighter aircraft,
communications equipment, guided missile systems, advanced telecommunications,
and computer systems.
It's a legal and
necessary part of doing business internationally these days. But actually
it all began after World War II, based on the theory that co-production
agreements were needed to help European countries rebuild military-industrial
bases so they could resist communism.
has died, and the European arms makers got back on their feet, but the
"offsets" stayed, as the genie was out of the bottle and nations
figured out how they could play the offset game.
Offsets are now
such a fixture that major contractors have entire departments that focus
on this effort, which includes "twisting the arms" of their
suppliers into participating as well.
Today 120 countries
around the globe now require offsets in military sales/purchases. And
the biggest recipients of offsets are among the most sophisticated countries:
Finland, Britain, Israel, Switzerland and the Netherlands.
a country spends many millions (sometimes billions) to acquire military
equipment, or other large scale products and services, they press the
sellers to do things in return for getting their business. Things like
creating work for their citizens by transferring sub-assembly jobs to
their country...helping export their goods or foodstuffs...financing
medical clinics, or building shipyards.
Such offset demands
generally range from 20% to 100% of the invoice value of the sale. As
can be imagined, these are sometimes enormous transactions and take
decades to complete--it's a form of reciprocal trade at the highest
level. For more information on this way of doing business, refer to
our countertrade section by clicking here.
Hears From Other Side
Under pressure from
the nation's largest media companies, the FCC is currently proposing
to relax or ax many of its restrictions on media ownership. The industry's
major players insist that competition has eliminated the need for the
TV ownership cap (a company can't own more than 35% of the nation's
But the nation's
eighth-largest multiple cable system owner, Mediacom Communications,
told the FCC in a 98-page filing last week that many cable companies
have been reduced to the status of serving the Big 6 (Viacom, AOL Time
Warner, The Walt Disney Co, News Corp, Liberty Media, and General Electric)
as pipelines for forced distribution of content selected by the programmers
and as agents for collecting money from subscribers and passing it along
to the programmers.
Mediacom says before
the FCC allows the nation's major media companies to acquire any additional
broadcast TV stations, the agency should adopt a wide-ranging series
of regulations--including one that would allow cable operators to offer
high-cost programming on an a la carte basis--to protect the rest of
The All-Time Trade?
will get many answers to the question about the all-time trade. But
if one of the criteria is the eventual cash out, here's one that surely
Texas attorney Joseph
Jamail traded his time and expertise to represent Pennzoil in its court
battle with Texaco in the last 1980s. Jamail chose to barter his abilities
for a percentage of the award, if he prevailed, versus that of collecting
an hourly fee for his firm's services.
His belief and the
size of the eventual victory, $3 billion, saw Jamail earning an estimated
$420 million for his trading efforts.
Form of Payment
efforts turned into big money. But money, per se, isn't always the desired
outcome as Stephen C. Neal, a bright young attorney of Chicago's Kirkand
and Ellis, showed. In 1991 the then 42-year old attorney was considered
by his peers to be among an elite group of lawyers nationally.
Yet, few people
around the country had ever heard of him, or his firm. All that changed
when Neal came to the defense of Charles Keating Jr., the 67-year-old
former Lincoln Savings and Loan financier. Despite the fact that Keating
didn't have the money to pay his attorney fees, huge law firms lined
up to represent him. Why? Because of the notoriety such representation
gives a firm and the individual attorneys.
To put this in retailing
parlance, it's a kind of a loss leader. By representing a guy who gets
your name in the paper everyday, your fame spreads--which the next clients
will pay for!
barter company in the world is listed here click
through to our global list of barter companies.
Age Conference Message: No Free Lunch For TV Viewers
At the Advertising
Age Madison+Vine Conference held at the Beverly Hills Hotel last
week it was pointed out by Brodie Keast, Sr. VP of TiVo, that 50% to
70% of people watching TiVo recorded programming are skipping commercials.
And the threat presented by this personal video recorder has marketers
scratching their heads.
Some believe marketers
should be able to figure out how to bring brands closer together. Others,
however, insist anyone buying into the notion that branded entertainment
will be the savior of the TV business is "drinking spiked Kool-Aid!"
While product placement and product-integration in new shows rated discussion,
it was clear that it's a new game today. Ultimately viewers will have
to pay for TV if advertising drops as a result of commercial skipping.
you haven't read the current issue of BarterNews, get yourself
a copy now! Orders are shipped the same day we receive them. (Click
on Order Form.)
New Money-Making Ideas, and Valuable Contacts!
can obtain these ideas and contacts in every every available back-issue
And There. . .
- Follow-up on
last week's lead story about "Hidden Value In One's Assets"
and the importance of negotiating to retain a portion of the asset...
a subsidiary of Walt Disney, was one of the original backers of
the Lord of the Rings trilogy, but they had to back out when corporate
parent Disney blanched at the projected production costs of the
did remain as executive producer, and personally kept a piece of
the financial action: Disney and the Weinstein brothers (Miramax
Films Founders) each get 2.5% of every dollar collected from theaters,
video sales and other revenue from the "Rings" films.
Estimated revenue to the Weinsteins and Disney each could be more
than $15 million from each of the films.
Have you signed
up to receive a summary via e-mail of the Tuesday Report every week?
If not, go to the top of this issue (right hand corner) to sign
on the foreheads of 20-somethings by a London ad agency, suggesting
a new form of guerrilla advertising, was most impressive. Not in
the new idea, but more in how they were able to glean an enormous
amount of free and valuable publicity such as write-ups in the international
press and top-rated TV venues.
of liquidated goods now accounts for approximately 10% of the $25
billion-plus liquidation market for retail goods, according to D&W
Enterprises. But change is underway as big retailers (Sharper Image,
RadioShack and Dell Computer)are now running their own liquidation
sites on eBay.com.
the largest Internet retailer, is buying liquidated products to
resell as part of its efforts to keep prices low. Another player
is Overstock.com (a site with 70,000 items for sale), which buys
unsold wares from retailers and manufacturers and then resells at
- Starbucks introduced
an electronic gift card about a year ago and claims more than 5 million
of their cards have been activated. Cards are available in amounts
from $5 to $500...providing Starbucks with the use of that cash.