In a flash of genius, Gemstar, a Pasadena, Calif., company, converted promotion costs into licensing revenues by persuading publications across the country to plug its product and pay for the privilege of doing so. Last year CEO Henry Yuen and executive vice-president Louise Wannier were ready to market their VCR Plus+, a device that uses program codes punched in on a remote control to simplify VCR recording. They had one small problem: major retailers would carry the product only in areas where the codes were published. To roll out the product, Gemstar would have to publish the codes, which changed weekly, in each market.
Did Yuen and Wannier petition local newspapers to please take their money and print the codes? Nope. They pitched their codes, instead, as a hot new reader service, sure to boost circulation and renewal rates. They offered some publishers market exclusivity, persuaded local electronics retailers -- usually frequent advertisers -- to lobby, and in a coup de grace, got the papers (with some exceptions) to purchase the rights to print the Gemstar codes. About 150 papers already print them. And sales are taking off. Yuen predicts the company will sell at least 2 million units, retailing for $59.95 each, this year. "It's a brilliant marketing trick," says one newspaper editor.
"They were very, very clever," adds TV Guide president and publisher Joseph Cece, who won't disclose contract terms. "They saw it as a revenue source, not a cost of doing business." -- Anne Murphy* * *