Tuesday Report - June 5, 2001

A Barter Deal Will Help Californians Deal With Acute Electricity Shortage

The Northwest has available an additional 350,000 megawatt-hours of electricity through the Bonneville Power Administration (BPA). Whereas, down in California such power is certain to be scarce and costly over the coming summer months.

Enter a creative barter agreement...for every one megawatt-hour of power the BPA sends to California during daily peak demand, the California Independent System Operator (which manages California's power systems) will return two megawatts when daily demand is low.

It's estimated that the barter arrangement will benefit BPA by saving them $100 million, which would have been spent buying electricity at a higher price, in spot-market purchases.

More Barter Opportunities Ahead
As Mall Advertising Expands

A percentage of all advertising is bartered, and more will be coming on stream in the years ahead, as real estate developers are turning their shopping malls into marketing tools in the 1990s, when they installed billboards to generate additional revenue.

A recent joint venture signed between Mills Corp. and the William Morris Agency promises to bring on thousands of new locations of their Venue3D unit. These units will give marketers direct access to more than 1 billion consumers as they shop, eat, and seek entertainment at the joint venture's retail centers, hotels and other commercial locations each year.

Venue3D also includes Rouse Co., owner of New York's popular South Street Seaport; the 40-location Fairmont Hotels & Resorts chain; Vornado Realty Trust, owner of the L.A. Mart; Westcor Realty, which owns the FlatIron Crossing mall near Denver; and Urban Retail, which owns Water Tower Place mall in Chicago.

ICON Announces Alliance With Retail-Only
Real Estate Services Provider

ICON International, a corporate barter company, has announced forming a strategic alliance with ChainLinks Retail Advisors Inc. A retail-only real estate services provider which specializes in tenant representation, property management, project leasing, and other related services for real estate clients.

Troy Peple, president and CEO of ChainLinks, says, "This relationship will allow us to offer our clients a creative disposition technique that will effectively dispose of under-performing assets while avoiding millions of dollars in write-offs." ChainLinks completed more than 4,045 transactions totaling approximately 46 million square feet of retail space nationwide in 2000.

According to Geoffrey Disston, ICON V.P. of real estate, "ChainLinks is a market leader in efficiently handling property disposition. They have the capability to rapidly and accurately evaluate a property and market opportunity with a large army on the ground that no other company has."

Through the alliance, Connecticut-based ICON will pay an organization more (in trade credits) for a property than it typically can get in the open market. The trade credits are then used to save cash on the organization's budgeted line-items.

Here And There. . .

Global Internet advertising prices have taken a plunge in the last 12 months, with web ads now going for more than 30% less than last year, according to Internet research company Jupiter MMXI.

(The reasons for the sharp decrease are ample supply of space on numerous sites and sales networks that largely exceed demand for online advertising.)

The surplus of unsold ad space is worth $51 million to $60 million each month, with unsold space for the majority of European publishers exceeding 60%.
The soft economy has created travel bargains... The abundance of travel deals (four cruise lines are selling seven-day Alaska cruises for $599, resorts are giving away free nights, etc.) is a big change from last year, when dot-com riches were still circulating--keeping travel prices high.

The cruise industry contends they're selling at 1980 prices, even though the ships they were operating in 1980 are all retired and the new ships have better hardware, better food, and better entertainment. Check with your barter company for availabilities for your travel desires this summer.
Network Commerce has quietly sold off the asset balance of Ubarter.com, a wholly owned subsidiary of Network Commerce, to the ITEX organization. Ubarter was one of the pioneers of online barter e-commerce business.

Two years ago, some people within the barter industry thought the e-commerce world would obliterate the off-line trade exchanges. But that has yet to happen It's been much tougher than expected to develop a profitable online barter company which would prove the viability of internet trading. Network Commerce, under extreme financial pressure, decided it couldn't wait for the online barter marketplace to evolve into a profitable entity.
The Internet growth in exchanges, using dynamic pricing in business auctions, continues at a strong pace. It's estimated that $1.7 trillion, or 14.3%, of U.S. gross domestic production in 2004 will be transacted through the principles of Bidnomics--in which market value is determined through the bidding process.

"Set prices often do not reflect a product's true value, but with Bidnomics, buyers and sellers together determine the value through a process of bidding or bartering," commented Roger Sanford at Santa Clara University's Leavy School of Business.

"This free market, fluid pricing model is extending far beyond the sale of surplus merchandise and will ultimately become the predominant standard for business-focused commerce."
Interesting story about Richard Daynard, a Massachusetts law professor, who has filed a claim in federal court in Boston against attorneys Ronald Motley and Richard Scruggs. (The latter two have prosperous law firms, and are about to receive another $3 billion in fees from settlements of state lawsuits against tobacco firms.)

Daynard contends that Scruggs and Motley have refused to honor a handshake deal make in 1996 to pay him 5% of any fees they might collect for handling the anti-tobacco claims of state attorneys general. Motley and Scruggs say they never agreed to share fees!