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May 23, 2006

Written by Bob Meyer, Editor of BarterNews

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From the desk of Bob Meyer...       05/23/06

The World’s Largest Private Currency Continues To Soar!

Airline frequent flier miles (FFM) are without doubt the largest private currency in the world. Here’s a quick update on the ever-evolving currency and some of their future challenges ahead.

(For a look at other type of private currencies see our Secondary Capital Section, www.barternews.com/secondary_capital.htm.)

It was in May 1981, 25 years ago, that American Airlines introduced the first frequent flier program—a program designed to build loyalty among its passengers. No one envisioned what would eventually result from such a marketing idea.

Today more than 130 airlines issue FFM and 120 million travelers worldwide have accumulated 14.2 trillion frequent flier miles, according to editor and publisher of Inside Flyer magazine Randy Peterson. That’s enough FFM for 568,000,000 flights.

According to the U.K.s Business Guardian publication, a frequent flier mile has a value between 1-cent and 6-cents each. At 3-cents each, the 14.2 trillion miles have a value of $420 billion!

Frequent flier miles are major sources of revenue for the airlines. In the U.S., carriers annually sell about $2 billion FFM to other businesses to use as customer rewards. Thus, people who rarely fly have the ability to earn miles when using credit cards, taking out a mortgage, eating in restaurants, or buying flowers.

Interestingly—disconcerting if you really think about it—the sale of FFM is the most-profitable part of many airlines. Yet the actual cost of fulfilling these “free” tickets is minimal...less than $15 on average, according to an article the April Harvard Business Review titled “Your Loyalty Program is Betraying You.”

Joseph C. Nunes, associate professor of marketing at the University of Southern California’s Marshall School of Business and co-author of the Harvard Business Review piece, says in the short term the frequent flier mile programs are in good shape.

Longer term, however, could be a different story as credit cards and/or mortgage companies may one day wake up and say, “To heck with enticing customers with FFM. They’re costing us too much and consumers aren’t as attracted to them as they once were. We’re going to compete on price instead.” (That’s what happened years ago to the Green-Stamps-for-products redemption program.)

Additionally, fulfillment could become a major problem as airline fleets are decreasing in size. The legacy carriers of the world—such as United or American—had a combined fleet that was 22% smaller at the end of 2005 than in mid-2001, according to industry trade group Air Transport Association.

While there is little chance of fulfilling on 586 million flights as long as the industry continues selling $2 billion of FFM annually, the following story shows United is taking a small step in the right direction.

“Choices” Air Currency Launched By United

In an effort to make FFM more attractive, United Air Lines has launched a separate new form of air currency it calls Choices miles. The new program offers complete transparency in that there is no waiting, no black-out dates, and no seat restrictions or other conditions attached.

Choices can only be earned by using a Chase United Mileage Plus credit card. Although the miles can be used for flights on United, or hotel and car rentals, they must be booked online at www.united.com.

The Choice miles can also be used, at a penny-per-mile, toward payment of a previously purchased flight made at www.united.com. It’s only a matter of logging into the web site and transferring Choice miles against the billed airfare, i.e. the credit card balance is reduced when miles are credited against it.

Example: A ticket is purchased using a Chase Mileage Plus credit card via United’s web site for $299. When the bill comes you log on to united.com and transfer 20,000 of your Choice miles to apply against the $299, reducing your bill and ticket payment to $99. (Unlike a regular award ticket, you also earn FFM on the transaction.)

Best Wishes To Pili As He Moves On

A friend of the barter industry, Pompiliu Verzariu, has retired from his position as director of the Financial Services and Countertrade Division at the International Trade Administration.

A leading expert on countertrade and offset issues, Pili spoke at several International Reciprocal Trade Association (IRTA) functions. He authored numerous publications on countertrade, offsets and joint ventures, and provided BarterNews with several articles on his expertise.

Dr. Verzariu received his doctorate in physics in 1971 from the American University in Washington (DC). He conducted research on geophysical phenomena prior to joining the Department of Commerce in 1973, publishing 12 scientific papers while at the Applied Physics Laboratory of the Johns Hopkins University. He is now an adjunct fellow for the Center For Strategic and International Studies in Washington.

(Please feel free to forward our newsletter to your friends and colleagues. We have a “box” at the end of the newsletter for your convenience. See you next week. . .)


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IMS Revenues Up 53%, Operating Profits Advance 144%

International Monetary Systems (OTCBB:INLM) announced that the quarter which ended March 31, 2006, had a $1,742,338 gross revenue, a 53% increase compared to $1,142,383 for the first quarter of 2005.

In the first quarter of 2006, the Continental Trade Exchange (CTE) barter business had a profit of $77,000, compared to $31,600 in the same period of 2005, an increase of $45,400 or 144%. CTE processed $12,109,943 in barter transactions (representing sales only), an increase of 47% over the first quarter of 2005.

(The figures for the first quarter of 2005 do not include the revenues and expenses of the five companies acquired after March 31, 2005, which increased the IMS client base over 45%.)

To read the full report, refer to the Form 10-QSB that has been filed with the U.S. Securities and Exchange Commission at www.sec.gov.

Investrend Research Raises IMS Target Valuation

An investment service IMS is enrolled in, Investrend Research, which provides analysts to smaller publicly-traded companies that otherwise have little or no analyst coverage, has raised the company’s target valuation from $0.80 to $1.60.

Investrend analysts are paid in advance of initial reports, and neither the analyst nor anyone associated with Investrend Research may own or have trade in the stocks of a company under coverage.

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Florida Barter’s Bingman Crowned Broker Of The Year

Joyce Bingman, a Certified Trade Broker and travel broker for Florida Barter in Winter Park, has been named the National Association of Trade Exchanges’ 2006 Broker of the Year. She will be honored during an awards banquet in conjunction with NATE’s annual convention, to be held in Toronto August 10-12.

“It is such a humbling honor to be recognized by one's peers,” Bingman expressed. “An award such as this makes the exacting clients and challenging days seem insignificant. Working for Florida Barter, and having (founder) Scott Whitmer as my mentor, has definitely given me the edge in learning strong leadership, fair business ethics, and the knowledge of bartering.”

Bingman, who has been with Florida Barter for nearly 12 years, manages the travel department and handles all of the reciprocal trading business. During her tenure there, the travel department has regularly produced yearly record growth. Her presence has been instrumental in helping the trade exchange consistently rank as a top producer in the barter industry.

“Travel is not necessarily the most profitable side of bartering. However, it spreads the most enjoyment and goodwill while building memorable moments with clients,” Bingman said. “We travel brokers have all the best.”


Our Web Site Has Added A Search Tool For You

Ever wondered if a certain topic, person, or organization has been written about on the Barternews.com web site? Now you can easily find out, as we’ve added a search tool. It will quickly give you the answer to your questions, in 3 easy steps that take about 12 seconds!

At the top right of the page, just under where you sign up for the Tuesday Report you will see a little Google box. It is where you can (1) type in the name of a subject, company or person. Then (2) click the button for www.barternews.com to search the site, followed by (3) hitting the search button.


Arbitron Gets Seven-Year Pact With New Radio Rating System

CBS Radio has announced that it would use a next-generation measuring system from Arbitron, known as the People Meter. The announcement is an important win for Arbitron, as their lock on radio ratings is facing new competition.

Radio industry executives have been searching for an alternative to the ineffective paper-and-pencil diaries Arbitron presently uses. Several viable alternatives, such as IQ Stat with global positioning system technology, are competing to win over radio stations.

The seven year agreement begins immediately, which means CBS will switch to electronic rating as Arbitron launches the People Meter in the top 50 markets beginning this summer. The new system is a pager-like device that can pick up inaudible codes from radio signals and identify what station it is.

Editor’s Note: Because radio is one of the barter industry’s currencies, we’ve previously reported on the changing technology for measuring audiences...see Tuesday Report for December 23, 2003 and March 21, 2006.


Get New Money-Making Ideas And Valuable Contacts!

You can obtain useful, informative ideas and contacts in every available back-issue of BarterNews.


Nation’s Largest Shopping Mall Owner To Create Broadcasts

Indianapolis-based Simon Property Group is teaming up with the French firm Publicis Groupe to produce programming that will air on nearly 2,000 big-screen televisions in 50 malls nationwide.

The broadcasts will run in eight-minute loops with the content evenly distributed between advertisements and original lifestyle programming. Shoppers can check out the day’s deals on the plasma screens scattered throughout the shopping center.

To make the cut, retailers submit their best bargains and the top 10 are advertised for free. These free promotions are sprinkled between paid ads in a six-minute loop.

Nearly 2.2 billion customers visit Simon’s 300 malls each year.

The Growth and Use of Secondary Capital (New Money) Creates Unprecedented Wealth In Today’s New Age Of Possibility

There are many forms of secondary capital—which can be defined as any financial instrument that measures and communicates value in a common language. Would you like to see and learn more about the many forms of secondary capital?

We have 75 free, informative and inspiring, articles for you in our “Secondary Capital Section.” Check it out... www.barternews.com/secondary_capital.htm.


Every barter company in the world is listed on our web site, click through to our Global List of Barter Companies.


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