The weekly newsletter for everyone interested in barter--the world's most versatile business tool!

September 10, 2002

Written by Bob Meyer, Editor of BarterNews

The Growing Currency "Gorilla" ...Now Valued At $500 Billion!

Frequent-flier miles, dreamed up by American Airlines 21 years ago to sell airline tickets, have burgeoned into an international addiction...and a significant new source of income that is helping tide the airlines over during some severe industry woes.

According to Randy Petersen, editor and publisher of Inside Flier magazine, today's value of frequent-flier miles is now $500 billion. (A mile is valued at 2 cents.)

Petersen estimates that United Airlines alone will make $1 billion this year selling airline miles to such firms as telephone companies and credit card issuers, which then offer miles, or points, to customers who use their services. (More than half of all airline miles are now accrued through methods other than flying.)

The growth in just two decades of this secondary currency, now the second largest currency in circulation, is truly phenomenal. To put it into perspective, consider that our nation's total international travel market, where some 47 million visitors visit our shores and spend money, totals $100 billion. Airline miles growth and usage far overshadows the barter industry's worldwide efforts, where an estimated $7.8 billion in goods and services were moved, using another secondary currency the trade dollar, in 2001.

Is There A Message Here For The Commerical Barter Industry?

Thirty years ago independently-owned banks came together in a cooperative effort to form the Visa network. Last year Visa and its member banks earned almost $30 billion in processing fees, which average 2.08%.

In the September 16 issue of Forbes an excellent article portrays Visa's intent--to make paper money a relic. Their newest and most ambitious goal is called Visa Commerce. They're moving forward to entice companies to use Visa in business-to-business transactions up to $10 million. The average Visa transaction today is $66.

Business-to-business transactions in the U.S. total $11.5 trillion, with 86% now being paid with paper checks. The new venture will forego the 2% commission for a negotiated flat fee, and transactions will be initiated by the buyer--who will decide when to release payments to suppliers, just like they now do when paying by check.

An Idea Thirty Years Ago--Today A Powerhouse

Few of the bankers who came together decades ago in the cooperative effort would have imagined today's enormous network that is comprised of 799 million cardholders, 27 million merchants, and 20,871 member banks.

In these numbers, and this incredible accomplishment, there's a message. An enormous opportunity awaits the 40-year-old commercial barter industry once a serious and committed move is undertaken. A critical mass of business owners is needed for the industry to reach the next level, one with an infrastructure that makes it easy for millions of clients/barter cardholders to go anywhere and easily spend their trade dollars in a seamless transaction. We haven't reached that point, but the blueprint is there for us to follow.

One of the largest, if not the largest, advertising mediums of all is overlooked by many manufacturers. Incredibly, they're overlooking a potential goldmine. On page 89 of FastStart I you will see the enormous possibilities open to them and you.

TradeTracker Technology Provides Multi-Way Trades

In late August Tom Langel of TradeAway brought together 40 vendors of services and supplies related to the sporting and equine industry for an Expo and barter auction. The results were quite impressive. The auction, utilizing their TradeTracker software, took about an hour with 30 simultaneous transactions which totaled $35,000!

A grocery store took a voucher from the fencing company, which took a horse ranch voucher, the horse ranch took horse halters from the halter manufacturer, which took 60 days horse training from the horse trainer, the horse trainer took a set of harnesses from a dude ranch, which took a voucher from a environmental toilet manufacturer, the toilet manufacturer took a voucher from a farrier, who took a voucher from a custom embroiderer, the custom embroiderer took a website developer, who took a voucher from a well drilling company, the well driller took a voucher from a taxidermist, who took the second custom embroidery voucher, the embroiderer took a voucher from an equine facility, which took a voucher from a radio station, the radio station took a pack-in fishing trip, the outfitter took a website, the web company took a voucher from a sporting goods manufacturer, which took a website, the web company took a custom taxidermy voucher, who took a guided mule-deer hunt, the outfitter took a voucher from a tent manufacturer, which took hay, the rancher took custom made leather goods, and the leather company took the groceries. The balance of the auction were two and three way trades.

Tom Langel
TradeAway.com
langel@tradeaway.com

MicroTech and BarterMail Ban Advertising That Promotes Selling Trade Dollars For Cash

On line e-mail service MicroTech will no long allow sellers to advertise their trade currencies (trade dollars) for cash. They will, however, continue to allow buyers to advertise their desire to buy trade currencies for cash.

MicroTech says it has witnessed the deteriorating value of some trade currencies, and has seen members leaving trade exchanges because of discouragement.

"In order for barter to grow," declared Joe Khoe, "we need traders to stay actively trading with as many people as possible. The efforts of trade brokers to recruit new members to trade with is compromised by currency depreciation."

E-mail service BarterMail reports, "In the interest of supporting the true values behind building individual and corporate barter economies, we have determined that it is not in the best interests of the barter industry to advertise the sale of barter currency, for cash, at irresponsible discounts. In the same spirit, we encourage our subscribers to exchange various barter currencies at par (i.e. $1 BXI for $1 Intagio, etc.), although we have no stated policy in this regard."

How many back issues of BarterNews have you read? Did you know that the cover of every issue ever published is found on our "Issues Page?" Click Here

• A new Wall Street Journal/NBC News poll shows the struggling economy and the stock market turbulence have the attention of Americans...eight in ten believe the economy remains in recession and 64% lack confidence to invest in stocks.

  Seven in 10 also say they don't worry that terrorism will affect their own family. By contrast, an equivalent 70% of Americans say they have been hurt by economic weakness and the stock market decline.
  

• Have you signed up to receive a summary via e-mail of the Tuesday Report every week? If not, go to the top of our Home Page (right hand corner) to sign up!
  

• National Airlines, now operating under Chapter 11 bankruptcy-court protection, is "bartering" with employees...lowering their compensation by as much as 20% in exchange for a significant equity stake in the company when it emerges from Chapter 11.
  

• And you think business has been tough! Consider that 140 million people went to trade shows in 1999. Attendance fell to 126 million in 2000, and then shrank another 7.4% in 2001. This year Trade Show Week magazine predicts that attendance will plummet to 55.8 million!
  

• American advertising expenditures last year totaled $94.3 billion, dwarfing the $5 billion companies spend on public relations. Al Ries, author of the new book The Fall of Advertising & The Rise of PR, contends that "advertising can only maintain brands that have been created by publicity." In other words, according to Ries, we are doing things backwards--PR builds the brand and advertising sustains it, not the other way around.
  

• One of the most desired clients within a trade exchange is a restaurant. The September issue of The Competitive Edge shows why restaurateurs in your community need the services of a trade exchange. (This issue could be worth thousands to you in commissions when signing up a handful of new restaurants.)

  The article includes pie charts showing costs for full service and limited service restaurants. Powerful material for your sales efforts. So, check out the hottest marketing tool in the industry...click here!
  

• TKO Software, a video game developer, considers themselves a nontraditional startup by following a different path. Rather than getting advances against future royalties (which gives others power over them), the company is developing their franchise inexpensively and maintaining control. A big factor in accomplishing this feat has been the use of barter--providing 20% of their employees with equity in lieu of salary, bartering for office space, and picking up a software platform in the same manner.
  

This Issue's Glossary of Terms:

Downstroke:
The down payment which justifies the transfer of title, subject to additional payments, until the full amount of purchase is paid.

Due Bill:
A brief written acknowledgment of a debt, usually due upon demand. It's a promissory note often used to describe certificates issued by hotels, motels, or resorts to provide a given dollar amount of accommodations under stated conditions (transferability, expiration date, et cetera).