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May 29, 2001

Microsoft And United Airlines Agree To Countertrade-Type Arrangement

Microsoft is "teaming" with United Airlines wherein both will benefit in a type of countertrade arrangement when each buys from the other. Microsoft is going to advertise on in-flight videos and magazines (and mail to United's 40 million frequent fliers) information about their MSN Internet access services. In return, United Airlines will buy advertising on Microsoft's MSN network of web sites.


Fashionmall.com Reports Barter Revenue Totals 35%

Fashionmall.com operates a variety of vertical shopping and content portals in the fashion, beauty, and lifestyle space. They generate revenue through traffic-based contracts and slotting fees with manufacturers, retailers, magazines and catalogs which advertise, display and sell their products on the firm's sites as well as through traditional advertising and sponsorship sales.

The company reported total revenue of $1,341,000 for the first quarter 2001, up 2% from the previous year's quarter. But barter revenue increased both in total dollars and percentage with $470,000 barter representing 35%, compared to $131,000 representing 10% of revenue for the same period in 2000.



Here And There. . .

  • TradeBuilders, based in Washington (DC), helps companies go global through its internet portal...which simplifies the international trade process as well as increasing business opportunities while reducing risks
    and slashing costs.

    Using a proprietary process, TradeBuilders virtual trade missions establish and build relationships over the Internet, with the help of personal facilitation and a conferencing-software platform. The technology replicates the traditional trade mission process, and can result in business deals at a fraction of the usual cost of developing and conducting international business.

  • Last week we reported on Delta's "Back to Barter" efforts with another warrant deal, working with Cheap Tickets in exchange for an equity warrant in the seller of discounted travel.

    This past week Delta confirmed they plan to sell another five million common shares of Priceline.com (received in the original warrant deal)...which will bring in another $26 million.

    Plus, Delta still owns 32,212,199 common shares of Priceline! All this, for agreeing with Priceline, to offer their surplus seats, for cash, through Priceline.com's online selling service!!

  • International deals... Venezuela's coffee producers are facing a fall-off in exports as well as heavy competition from major growers like neighboring Colombia. So Venezuelan is looking to Russia as a new market, where they will exchange coffee for tractors and other items.

    Another major countertrade deal involves China Railway Engineering Corp., which will build a $1.6 billion ($6 billion ringgit) rail project in southern Malaysia. In exchange Malaysia will pay 8 million tons of palm oil over a period of five years.

    And France has renewed its Cuban $175 million barter agreement. France ships wheat to Cuba which is paid for by Cuban sugar.

  • IRTA News... The International Reciprocal Trade Association's North American Chapter reports that their marketing committee is placing national advertisements in several key business publications beginning in September.

    This year's Barter Congress, to be held in Denver September 20-23, has three professional speakers retained in addition to the keynote speaker. For more information call IRTA at (716) 424-2940, or visit www.irta.com.

  • NATE News... The National Association of Trade Exchanges will be holding their 5th Regional Convention on Friday October 5th and Saturday October 6th in Akron, Ohio. For more information go to NATE website, www.nate.org.

  • The amount of occupied space in malls and shopping centers in the top 50 markets diminished by 5.8 million square feet in the first quarter of the year. (That's the first quarter of negative absorption since 1992.)

    The softening economy is sharply curtailing demand for store space, and bankruptcies are adding to the woes. More than 20 filings involving large retailers or movie theater operators have filed in the past 18 months.

  • Frequent flier miles--the $80 billion currency--are being redeemed more. Airlines gave out 6% more awards last year than the year before, and this year, reportedly, the percentage is even higher. One reason, the airline industry has seen their load factor (seats on the airplanes) drop a bit. In the first quarter this year, 68.5% of the seats were used--creating 17,000 empty seats a day.

  • Gemstar-TV Guide International and Youbet.com have formed a partnership that embraces a barter component. Youbet.com allows customers to place bets online to horse tracks in 39 states. Gemstar has a cable-TV channel (TVG) dedicated to horse racing.

    The deal between the two will provide TVG with access to YouBet's technology and a share in the revenue from wagering activities. YouBet will gain content from major horse tracks under exclusive contract to TVG which they didn't previously have access to.

    In addition, like the Delta warrant deal reported on last week, Youbet has issued warrants to TVG for purchasing up to 20% of their 19.4 million shares over the next 3 years at a penny a share. (After the agreement was announced Youbet shares rose 81%, to $1.36.)

  • Pricewaterhouse predicts a hotel boom in 2002, as corporate travel is likely to rebound after cutbacks this year. And vacationers are likely to maintain their far-flung travel habits. Couple that with a drop-off in construction of new hotels, and occupancy rates will bounce back, making it easier for hotels to raise their prices.

  • Magazine publishers report not only slower spending by advertisers, but those who once committed to buying pages on a 12-month schedule are increasingly making short-term decisions for their shrinking budgets...sometimes buying on a month-to-month basis. All of which bodes well for additional media availabilities on barter.

 

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