Towards a 21st Century Exchange
Part 1: What the Past Can Teach Us

By David Skinner, President Holiday Equity

The year was 1999 and it was all the buzz. It spread quickly, from universities and colleges to desktops across America. It was “techie.” It was cool. And it . . . would set the music industry on its heels, launch a potent social movement, and empower people in a bold, new way.

“It,” was a simple, easy-to-use computer program developed by a young man named Shawn Fanning, who named it after his own childhood moniker: Napster. Once installed, it tirelessly roamed the Internet in search of other Napster users to allow them to share and download music files, to build a community of enthusiasts, and to never again have to shell out twenty bucks for a music CD—and in doing so, making history. In their own way, Fanning and the Napster network had “set information free.”

Meanwhile, the recording industry, already in decline, saw the looming threat and launched a savage counterattack against Napster. It was David versus Goliath, America’s first fully “wired generation” versus the Evil Empire, a faceless monolith with absolute control of the manufacture, distribution, and sale of recorded music.

While Napster won in the court of public opinion, it lost in the Ninth Circuit Court of Appeals. In two short years, Napster went from phenom to failure, from downloaded to downtrodden. The recording industry, led by A&M Records, prevailed on a point of law. Music, after all, is not free; it’s copyrighted.

What has Napster to do with timesharing? Perhaps plenty. It may just be the harbinger of a new paradigm in vacation ownership. It may point towards an owner-empowered future, a changing of the guard, an exchange network for the people, by the people, and of the people. Is such a thing possible, you ask? The answer is yes, it’s possible, perhaps probable, and maybe inevitable. Some might even say it’s imperative.

If the exchange of your timeshare is important to you, and in a recent ARDA survey 88% of owners indicated it is, then something like Napster or its next iteration could be in your future. A 21st century exchange that is self-governed, transparent, and fair, built on the principles that gave birth to Napster—a peer-to-peer owners’ network of sharing and exchanging, a community of timeshare enthusiasts to never again be denied or downgraded, and all the while making history. Yes, it’s possible.

Napster’s Epilogue

From his college dorm room using off-the-shelf technology, Fanning attracted a global network of people bound by similar interests, motivated by a single purpose, each collaborating with all for the common good. He rocked the world. Napster demonstrated that by coming together we can create change, we can level the playing field, and we can make a difference.

In the end, Napster did make a difference. Shortly after its demise, the recording industry began to adapt to this new world of connectivity. Theirs was no longer the best means of music distribution. The degree to which Napster contributed to this revolution is hard to say, but it’s now possible to download music for only $.99 a song. And that’s something.

Making It Happen

THE TECHNOLOGY. The technology and software necessary for our exchange system is highly complex and multi-layered. It must be made scalable to allow for rapid growth, robust to handle thousands of concurrent transactions, and built as “open source” for universal connectivity and innovation. The good news is these technologies are currently available, demonstrable, and proven. Here are some familiar online companies already applying these technologies:

• Amazon sells books online as well as provides a platform for others to sell books.
• Expedia provides real-time travel information and reservations in seconds.
• eBay enables price negotiation, transfer settlement, and user quality ratings.
• Google makes key word searches, but also measures Web site traffic. 
• Facebook, the social network site, creates communities around shared interests.
• Wikipedia, the online encyclopedia, is collaboratively written by volunteers.

THE PROCESSES. When these technological applications are combined as a single enterprise system they provide the firmament for an electronic market to emerge. But technology alone is not enough. Next we need to lay down the processes involved in making transactions.

At its simplest, a timeshare exchange is a marketplace composed of owners making transactions and creating value. This was reconfirmed recently by Craig Nash, president of Interval International, when speaking to Wall Street analysts. He said our business “compares more favorably to the security exchanges than to time share, lodging or online travel. Interval is a marketplace, just like the NYSE and NASDAQ are marketplaces.”

According to Ajit Kambil and Eric van Heck, authors of Making Markets, and respected authorities on electronic markets, there are five primary processes involved in online exchanges:

• Search processes that allow buyers and sellers to discover and compare trading opportunities
• Pricing processes to help buyers and sellers discover prices
• Logistical processes that coordinate the transfer of physical and digital goods between buyers and sellers
• Payment and settlement processes to transfer funds from buyer to seller
• Authentication processes to verify the quality of the goods sold and credibility of the buyers and sellers

In addition, they cite five trade context processes that enhance trust among trading parties and legitimizes the trade:

• Product representation processes that specify the presentation of products and services to buyers and sellers
• Regulation processes that record and recognize the transaction within a framework of laws and rules to signal it as legitimate and conforming to a set of market rules and social principles
• Risk management processes to reduce buyer and seller risks in a transaction
• Influence processes to ensure the commitments among trading partners are met
• Dispute resolution processes that resolve conflicts among buyers, sellers, and market makers such as auction houses

Even given the latest technology as our foundation and with the structural processes in place, one element is still missing—the one necessary to breathe life into our network. 

THE HUMAN ELEMENT. Networks may be intentionally built or, providing the essential elements are present, they may emerge spontaneously. In either case, a network must have a raison d’être, a reason to be, a calling, a compelling human need that must be fulfilled. Again referring to Kambil and van Heck, “electronic markets are not technological interactions. They are human interactions supported by technology.” What’s still missing, then, is the human element.

In other words, before our network can emerge, we must arise. It’s not enough to “build it and they will come.” But rather, like Napster, timeshare owners must come together, motivated by a single purpose, each collaborating with all for the common good. Only then can we begin to create change, to level the playing field, to make a difference. In the famous words of Howard Beale from the 1976 movie, Network:

“But first, you’ve gotta get mad! You’ve got to say, ‘I’m as mad as hell, and I’m not going to take this anymore!’ Then we’ll figure out what to do . . . .”

In Part 2, we’ll look at the major timeshare exchange companies, the good and the bad and the important roles they might play in the 21st Century Exchange. If you have an opinion, or you’re “not going to take it anymore,” you can weigh in at: http://www.exchangewiki.com, or simply add your name to the Alerts List.

Click Here to read Part 2>>

David Skinner is founder and CEO of the Holiday Equity. The company was started in 1992 to fill a vital need in the timeshare industry. It serves as a financing and sales bridge between resort sales and the resale market. He has spent his professional life in real estate brokerage, investment banking and securities, and as an entrepreneur. These qualities came together to form the basis of which Holiday is built upon.

David has three adult children, is married and resides in Puerto Vallarta, Mexico, from where he commutes to Seattle, Holiday’s home base. He can be emailed at dskinner@holidaygroup.com.

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