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October 10, 2000

Coming In November...BarterNews' Special "Internet Issue"

The largest issue ever published in BarterNews' 21-year history will be published in November; it will focus on new technology that promises to transform the barter industry.

Plus, this special issue will tell the story of how a major multi-national bank has lapped the commercial barter industry by creating their own trade credits to be used for international commerce as well as b2b internet sales.

To get your company's advertising message into this special "Internet Issue" click through "Advertising" at www.barternews.com. Closing for artwork is October 20th.


Major Movie Studios Guarantee Distribution Through Barter Deal

Twentieth Century Fox, SKG, and Universal Studios Home Video have entered into a barter deal with Kozmo.com, acquiring non-cash equity minority stakes in the New York-based internet delivery service (approximately 1.4% interest in Kozmo...valued at $10 million).

In exchange for stakes in Kozmo, the movie houses are providing Kozmo with videos and DVDs at lower prices. Both sides benefit, Kozmo guaranteeing themselves a supply of videos and DVDs, and the studios enhance the distribution of their product.


Mattel Barters Its Liability

Bartering their way out of a terrible business deal is essentially what Mattel did when they moved the Learning Company. That unit, which Mattel paid $3.5 billion for only 16 months ago, was losing $1 million a day...a real drag on Mattel's stock price.

So the final barter deal, which really says "take this liability off our hands," is labeled as an "earn-out," i.e. a promise to pay a percentage of earnings in the Learning Company back to Mattel in the future. It is estimated to garner but $300 million, overall, for Mattel.

Bottomline: Mattel's snafu will top the 1997 Quaker Oats sale of Snapple, which was a $1.7 billion purchase that was then re-sold for $300 million three years later.


Did Abandonment of "Barter Offer" Contribute To New Entity's Demise?

Last week Priceline.com entrepreneurial founder Jay Walker announced he was shutting down Priceline WebHouse Club, his name-your-own price grocery and gasoline sales operations, because the company has run out of money. (That company is separate from Priceline.com.)

The main problem: Consumer-products companies weren't willing to give Walker the discounts he needed to make the site work, so he ended up subsidizing all the products the shoppers bought.

Priceline has a similar business model to WebHouse Club, but had much better success in getting off the ground because the airlines agreed to offer discounts when Priceline used a barter offer--trading warrants in Priceline to the airlines--so as to gain their discounting cooperation. Maybe the barter offer should have been extended to the consumer-products companies.


Here And There. . .

  • A significant 10-year commitment to use Global Crossing's fiber-optic network (to carry the bulk of Exodus' traffic) was negotiated by Global Crossing in their $6.1 billion stock deal, wherein they moved their Global Center web-service unit to Exodus. The "I'll sell to you if you'll work with us and use our services" deal is estimated to be worth $4 billion. Putting it together was Ms. Ellen Hancock, the 57-year-old driven CEO of Exodus Communications, the world's No. 1 web-hosting company. (Global Center was the No. 2 company.)

  • Miradiant Global Network, a global provider of electronic invoicing, transaction settlement and information management services, and iSolve, a b2b marketplace for surplus inventory and corporate barter, have formed a strategic alliance which will enable iSolve to significantly streamline invoicing and settlement of corporate barter transactions across the Internet and on its web site, iSolve.com.

  • India's instant coffee exports are expected to jump now that the government is allowing instant coffee to be exported to Russia, under an agreement wherein Indian products can be bartered for Russian defense imports.

  • Enfrastructure Inc. from Orange County (CA) is embracing barter to promote a series of high-tech business campuses for approved new start-up companies across the country.

    Founder Scott Blum, the 36-year old founder of Buy.com, is essentially bartering Enfrastructure's set-up on its campuses (including all the necessary phone equipment, computers, software, office, and accounting services) in exchange for service fees and a 10% ownership stake in the new entities. The first campus will appear in Orange County in December. IBM, Microsoft, and Arthur Andersen are partners in the $100 million venture.

  • U.S. internet visionary Nicholas Negroponte has provided significant financial backing to a UK website, Webswappers.com, where people can barter their unwanted belongings. Negroponte was a founder of the Massachusetts Institute of Technology media lab, established Wired magazine, and has written best-seller Being Digital that has been translated into more than 40 languages. He serves on the board of directors at Motorola, Inc.

  • Inventories guarantee corporate barter companies a lot of business. And according to Thomas J. Winninger's new book, Full Price: Competing on Value in the New Economy, some 20,000 products are being introduced this year--but 18,000 of them will fail! That should be more than enough business to keep the corporate barter companies very busy.

  • BarterNet, the world's largest barter company with some 28 trade exchange affiliations, has appointed Ed Barrantes as its Chief Financial Officer (CFO). Barrantes has two decades of achievements in finance and business operations including over $200 million in closings of mergers and acquisitions in the U.S., Far East, Europe, and South America.

    He has also launched ten companies from ground zero for divisions of Rockwell International, Memorex International, General Instrument, and CIBA. Barrantes holds a BS in Economics and Accounting from San Jose State University, and an MBA from UCLA.

 

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