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Technology Stocks : WAVX Anyone? -- Ignore unavailable to you. Want to Upgrade?

To: Jesse Livermore who wrote (7817)	7/5/1999 4:32:00 PM
From: Paul Schmidt	Read Replies (1) \| Respond to of 11417

Dear Jesse, Howard keeps on plugging away with the refrain: Wave 25% - Visa 2.5% However, does he ask: 25% of what? or 2.5% of what?. Scorn was heaped on the model of mypublish.com, but it hides quite powerful ideas. Simple example: ....since Howard likes figures. Say Joe Bloggs Very Ltd produces a video. Their resources are limited, and since they are an unknown company and nobody trusts the quality of their products (sic!), they trundle the corridors of video distributors, and perhaps finally one day secures a deal: Here is the deal: ...says the distributor: "...you really are an unknown company....limited distribution possibilities....lotta risk for me to absorb. Okay, so I will give you $2 for each video sold, but only on sales over ten thousand copies, which will barely cover my costs. Oh yes, and I really think we ought to cut the video differently" So the video distributor sells the video to retailers @ $10 + 2.5% Visa charge (the only trusty way to sell of course), and the retailer sells on @ $15 + 2.5%. Eventually in total 20 000 copies were sold. Joe Bloggs makes $20 000, distributor ($5 profit/video??) $100 000, and retailer whatever. Joe Bloggs does not know, and will never know whether: - the distributor had taken him for a ride - his video could have sold more if he could get it out to more customers Take the Wave model then: Joe Bloggs can set his video up on a server advertising to a worldwide audience (this after all is what the internet is all about, isn't it) Not difficult to imagine 100 000 people looking at the video trying it out, perhaps only 10% liking it enough to pay the $3 to own/view the video in total. But Joe Bloggs is getting 65%, so is taking home about $20 000 on half the number of copies sold...what if he sells a LOT MORE because the price of the video is less than ONE FIFTH the hard copy..... Wave, in the place of the traditional middle man(remember $100 000?) gets about $7000 and the boxmaker $3000. What did Visa make out of the original (hard copy) deal? If both distributor and retailer used Visa: $12500 about. If just the retailer used Visa: $7500. Now Howard should ask himself how much Visa would make IF they COULD do microtransactions: On $30 000 ($3 * 10000 copies) @ 2.5% that would make it $750. Not an awful lot. Especially if you a Visa and you have an awful lot of staff to pay, lots of execs to keep happy, buildings to rent etc. etc. Oh, dear, oh dear. Ah, but Visa could use their financial clout to cross subsidize their way out of this one ala Microsoft. Lets grind the little upstart under the foot. However, one little point I should add: for each digital copy sold by Wave there is one less hard copy sold. That nice revenue with which to cross subsidize is fast disappearing. ...and that is just one little story with which to amuse Howard. Replace "video" with "music", "photo", "greeting card", "conference booking", "software game", "financial report" etc, etc. Let us see Visa bring its razor thin margins to the digital world, and see if they survive. Let them bring SECURITY to the Internet with those margins. Percentages does not tell the whole story. And lastly: over and above it making bloody good business sense, this example shows why I like the stock above all: It takes the money from those fat boys in the middle, and put it in the pockets of those that deserve it: those that have actually created something. It removes the censorship of capitalism. After all that is what the Internet is all about, isn't it. Methinks the playing field is more level than Howard would want us believe. Caio Paul