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March 13, 2001

Barter Plays Major Role In ESPN Offer

ESPN.com, a part of the Walt Disney Co. Internet Group (a tracking stock), is busily putting together an ambitious renewal offer to the National Football League in which barter will be important factor.

To hold on to that coveted contract ESPN is vigorously pursuing the renewal of its rights to produce NFL.com, as that relationship has played a major role in establishing ESPN.com as one of the web's top sports sites. (ESPN has produced the NFL's site for the last three years.)

Substantial Barter Offer A Key Ingredient

ESPN's offer is valued by the NFL at about $250 million over five years. It includes $50 million cash upfront and an estimated $150 million in barter--promotional value--during the same five year period.

It's expected that other sports web sites will challenge ESPN for the NFL rights, and predictably, barter once again will play an important, if little-known role, in the winning negotiation.


Strong Shareholder Message Delivered Trhough Barter Agreement

The top five executives at Centura Software in Redwood Shores (CA) are known as the "five-dollar management team." And they've sent a strong message to the shareholders regarding their unshakable belief in the company's future. The executives have each agreed to give up their six-figure salaries, from $150,000 to $250,000, for a $1 annual salary.

The group is betting heavily on the 250,000 stock options they each received in place of their considerable salaries, which will motivate them to expand the company. Needless to say, they totally believe in what they're doing!


Popular Web Site Trades On Ability To Provide "Brand Exposure" To Build Profitable Business

Selling products, often at very high prices over the web, would seem like a doomed business model...yet CyberRebate.com is proving to have a winning business model. Joel Granik, 24, is the founder and CEO of the popular web site.

While the rebates often amount to 100% of the purchase price, according to Granik, less than 10% of the buyers actually take the time to collect their rebates! He also makes money on those that do because the customers, after filling out their paperwork, must wait 10 to 14 weeks for the rebate check. (All the while their initial payment is earning interest for Granik's company.)

CyberRebate also is an astute acquirer of merchandise. Granik says that some of the business inventory comes from close-out sales. But more often, he contends, suppliers are giving him very favorable terms in exchange for brand exposure and what Granik says is huge volume!

In February CyberRebate.com was the 6th most visited web site with 7.7 million unique visitors. And they've recently concluded a marketing deal with Yahoo.


Here And There. . .

  • The National Association of Trade Exchanges (NATE) has scheduled its annual convention, titled Barter at the Beach, for April 19-21 at the Wyndham Hotel in Miami Beach. For further information see their web site at www.nate.org.

  • Another new advertising venue is being tested in Orlando, where closed-circuit television screens have been placed inside municipal buses to broadcast a package of news and weather--and plenty of ads!

  • EBay's march toward ubiquitousness continues with their multi-faceted internet alliance with Microsoft, which will carry eBay auction listings including MSN, CarPoint auto-shopping service, bCentral small-business site, and WebTV. Microsoft's sites collectively now rank No. 1 in global traffic, making them a tremendous vehicle for broadening eBay's exposure.

  • Wyndham hotels has 163 properties and is promising personalized services, instead of using loyalty programs whereby guests accumulate points for future stays.

    Wyndham guarantees that after a guest fills out a personalized profile, which includes basic room preferences and favorite drinks and snacks, any of the company's hotels will (be able to) fulfill those requests. The company is confident that this totally different plan is the right competitive approach in today's marketplace.

  • Donald Hacker, former president of Tribune Entertainment in Chicago and responsible for overseeing the development, production, and distribution of TV projects including Geraldo, Siskel & Ebert, G.I. Joe, and Joan Rivers, has joined Raven Moon International's west coast office in Los Angeles.

    During his 15-year stint with Tribune, Hacker formed one of the largest barter advertising sales organizations--with annual sales in excess of $150 million.

    Raven Moon International, located in greater Orlando, is involved in the production of family entertainment programs and related licensing and merchandising of videos, toys, CDs, e-commerce, web sites, music publishing, and talent management.

  • Warren E. Buffett, the brilliant 70-year old chairman of Berkshire Hathaway, had some harsh words for the dot.com community, stating in his annual letter, "Bubble companies' (dot.coms) primary objective was to make money off, rather than for, investors. The 'business model' for these companies has been the old-fashioned chain letter, for which many fee-hungry investment bankers acted as eager postmen."

 

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