The Million Dollar Feature Movie Made Using Barter

Editor�s Note: I met Mark Knudsen back in 1988, and spent several hours sharing ideas and information with him at the Disneyland Hotel in Anaheim. Our common ground was our respective publications, Mark was the publisher of The Travel Agent�s Hotel Guide.

Before the meeting ended we had cemented a business relationship, and he became an advertiser in BarterNews until he sold his publication to the ITEX organization four years later.

That same year (1992) in issue #25, an article titled, �ITEX Revisited� highlighted how ITEX was using the newly acquired Travel Agent�s Hotel Guide to secure hotel inventory in Mexico and the USA...trading space in the publication for room nights.

We recently came across the following article in MovieMaker magazine and wanted to share it with our readers for obvious reasons. . .

Mark Knudsen, who lives in Redmond, Washington, with his wife and five children, has dedicated a good portion of his career to proving that most anything that can be bought or sold can also be traded for. When you walk through his office or home you�ll find that virtually every stick of furniture, every piece of art on the wall, every item in the yard from the shrubs to the trampoline, all bartered for. To make his 35mm feature, Summer of the Eagle, (shot in Utah) last August, Knudsen had to barter everything from raw stock, Panavision camera equipment, grip rental and lab services to talent, catering, and the expertise of over 20 seasoned crew members. The following is Mark's story in his own words:

I guess I always knew I'd make a movie someday. It's one of those things that kind of sits in the back of your mind and when somebody asks  �What would you do if you had a million dollars?� I would always answer  �Make a movie.�

When I was in college in the seventies, I had a creative writing class where I wrote the first draft for �Summer of the Eagle.� Little by little I added to the script, developed the story, and whenever I'd tell it people would say �Hey, that'd make a great movie.�

In 1975 I met Mike Karr. Mike is the son of a filmmaker with celluloid coursing through his veins. Mike had been taught all the technical knowledge about film, lighting, sound editing, etc. since he was knee-high to a tripod. He had a bunch of 16mm gear that we used to make TV commercials and industrial films for our part-time jobs during college.

One day we were introduced to a woman who told us she knew an investor who had a million dollars or so that he wanted to invest in a feature film. A few weeks after we delivered the script for �Summer of the Eagle,� we were told that he had chosen my film for his investment dollars.

At this point we both quit our jobs and went into a pre-production frenzy. We had everything lined up for a summer shoot, and we had already made plans for the big bucks we were about to receive. But the day before the investor was to sign the contracts and put the money in our bank account, he was arrested for counterfeiting!

Knudsen: sold on the beauty of barter.

After that, Mike and I both got married and started raising our families and went our separate ways. �Summer of the Eagle� went on the shelf, but Mike and I both vowed that someday we'd make that movie.

I moved to Seattle with my family and worked in advertising, publishing, and various forms of corporate barter. I published a travel magazine (The Travel Agent�s Hotel Guide) for about nine years that introduced me to the concept of bartering travel for media and vice versa. This endeavor allowed me to trade advertising space in my magazine for travel credit. I traded advertising to hotels who paid with credit for their empty rooms. I was able to generate over $1,000,000 worth of hotel credit this way.

Mike stayed with filmmaking, focusing on documentaries, TV commercials, music videos, etc. About a year before two of my boys were old enough to have the main parts in the movie, I contacted Mike. I said I'll come to the table with the script, the actors, the raw stock and processing, the grip and camera equipment, the food and lodging, and anything else I could barter for, you bring your crew and your expertise. We had about $20,000 between us for incidentals, but in almost all cases we were able to convince the cast and crew to receive payment in a combination of travel and investor points in the movie.

When we started filming last summer, everything came together. Mike and I were fulfilling a life-long dream and no one could stop us. We hope to sell �Summer of the Eagle� very soon.

Real Estate Finance Pioneer Sees Staggering Global Potential

Sam Zell, 66, has been a pioneer in real estate finance, championing the real estate investment trust (REIT) as the optimum model for owning real estate in terms of liquidity.

His biggest real estate transaction to date was this year�s $23 billion sale to the Blackstone Group of Equity Office, the office-tower company he spent three decades building up.

Zell says he was never driven by accumulation, but rather by achievement. His favorite adages are: �Unless you�re the lead dog, the scenery never changes,� and, �Be a risk taker...however, define risk by your own terms.�

What about the future? The following are some of the comments he made last month at the New York Historical Society, in Manhattan.

Zell said we were in the �greatest monetization period in the history of the world.� What does this mean? Think of it this way: if you own an office building, and go public offering shares on your property, you have �monetized� the asset.

You have realized cash, turning a physical thing into a tradable security. That tradable security is in high demand these days, because people want that steady income from real estate. And the monetization of real estate is the process used for meeting that demand. On a global scale, this trend is only just beginning.

If you examine the size of publicly traded real estate markets around the world, compared with the total stock of real estate in each region, you see that very little real estate trades in the public markets. Europe has total real estate properties worth some $6.3 trillion, yet has only a tiny sliver in the public markets�about 2.8%.

That�s because European countries only recently enacted U.S.-style real estate legislation. According to Cohen & Steers, �In Europe, in 2007 alone, the United Kingdom, Germany and Italy enacted [such] legislation.� Suddenly, sealed-off private real estate has an open door to public markets.

Cohen & Steer goes on to note: �The sheer size of German private real estate holdings, for example, is extraordinary; a significant amount of these holdings could enter Germany�s public real estate market by 2010.�

Then there is Asia. Parts of Asia, such as Japan, Singapore and Hong Kong, have had U.S.-style real estate laws in effect since 2000. So they are ahead of Europe. But the opportunity remains large. As you can see, there is still only a small sliver of real estate holdings in public hands. Privately held real estate makes up the vast majority.

Zell is bullish on even North American commercial real estate. He said, �You must remember that commercial real estate is a global market. For a euro-based investor, U.S. real estate looks cheap.� As the dollar tumbles, it puts U.S. assets on sale. (For a U.S.-based investor, this trend of global monetization of real estate is a great thing. The more publicly traded global real estate out there, the more ways you have to hedge yourself against a falling dollar.)

Zell is no pie-in-the-sky theorist. He is active himself in Brazil, Mexico and Asia. He owns property and businesses all over the world. He sees with his own eyes the deals still there for the taking. Recently, for example, he described picking up a Mexican warehouse only 100 miles from the Texas border that pays a 14% cash yield.

Investors want that �steady income from a tangible thing�more now than ever, as Zell pointed out. And the market will respond. The big trend in real estate is the conversion of private real estate into public stocks. Also, rapidly growing economies in Asia and South America push the demand for all things real estate. They need more of everything�from retail space to office buildings to warehouses.

So you have lots to build, lots already out there in private hands and vast pools of money ready to own real estate. Today we see sovereign wealth funds�those huge piles of cash in government hands (especially those of the Persian Gulf states and China).

Triton Moving Toward Barter � Eyeing Internet Radio Sales

With last week�s acquisition of Excelsior Radio Networks, Triton Media Group aims to evolve the network radio business beyond traditional on-air boundaries to include an equivalent network buy on the Internet, according to MediaWeek.

Although terms were not disclosed, Oaktree Capital is estimated to have paid Lincolnshire Management north of $100 million for Excelsior. Lincolnshire Management will remain a stakeholder in the combined company.

The deal combines Triton�which provides a suite of digital products and services to 1,000 radio stations�with Excelsior�s syndicated programming, traditional radio networks (Dial Global), and interactive business (MJI Interactive) across 2,000 stations.

The unique combination of assets enables Triton to bring to the online space the traditional network-radio strategy of aggregating inventory locally to achieve national reach.

To build out a digital network that can be integrated with Dial Global�s traditional radio networks, Triton proposes to convert its fee-based relationships with stations to a barter arrangement for both on-air and online inventory. Integrated packages are expected by early next year.

Days after the acquisition was announced, Triton�s Mass 2 One Media, which provides a suite of online audience engagement applications (social networking, text messaging and loyalty/reward programs), inked a barter deal for on-air and online inventory. The agreement was with The Content Factory, syndicators of The Dan Patrick Show, and accompanying web site.

The market Triton envisions for integrated on-air and online radio packages is wide open. Currently about 95% of radio internet revenue is locally generated, but Neal Schore, Triton�s president and CEO, sees a much larger marketplace. �As it matures, we think it will be a 75/25 split. It wouldn't shock me to see a 50/50 split, and grow to at least $5 billion in the next few years,� he said.

�There hasn�t been a lot of opportunity in network online,� said Matt Feinberg, senior vice president of national radio for Zenith Media. �One of the concerns we have is that they be able to control what they�re selling. A big part of it is owning the assets. That�s why network radio hasn�t gotten into it.�

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

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