Bertelsmann, the Guetersloh, Germany-based media conglomerate, has appointed a management team and outlined a corporate structure for its new music-sales division, BeMusic.
The reorganization completes the transfer of digital and mail-order music businesses from Bertelsmann's record label, BMG, to its e-commerce group, BeCG, and will result in the creation of a unified Web portal for Bertelsmann's music offerings under the "BeMusic" brand.
"As consumers demand easy access to music in a variety of digital and physical forms, BeMusic stands to deliver their music through any possible channel, including music-club purchasing, e-tailing, digital downloads and streaming," Andreas Schmidt, BeMusic's chairman and CEO, said in a statement.
The BeMusic division, created July 1, is a collection of all of Bertelsmann's digital and direct-to-consumer music businesses including its record club, BMG Music Service; its e-commerce site, CDNow.com; and the newly acquired online storage service, MyPlay. BeMusic also oversees Bertelsmann's relationship with Napster. The division boasts 23 million subscribers and customers and $1 billion in music sales in the year that ended June 1.
At the planned "BeMusic" portal, consumers will be able to join the record club, buy music from CDNow, download or stream digital tracks or upload them to a virtual locker.
BeMusic is being organized into three divisions reporting to Schmidt – BeMusic Direct, BeMusic Digital and BeMusic Services. The direct group will oversee the music club, BMG Music Service and CDNow. The services group will consist of 1,800 Bertelsmann employees in mail-order-fulfillment centers in Indianapolis, Ind., and in Duncan, S.C. The digital group will create the strategy for a unified portal that pulls all the Internet assets together.
BeMusic Direct will be led by Stuart Goldfarb, 46, former president and CEO of BOL.com. Tom Hoekzema, 47, former SVP of operations for BMG Direct, will head up BeMusic Services. Schmidt, 40, will lead BeMusic Digital until a permanent CEO can be found.
The reorganization sweeps out the last vestiges of the old BMG regime led by former CEO Strauss Zelnick and Chairman Michael Dornemann. Under their leadership, BMG had authority over the record club, Internet initiatives and the world's second-largest CD-pressing business, Sonopress. Since a company-wide reorganization began last year, the Internet and music-club divisions were moved into the Bertelsmann eCommerce Group and are now part of BeMusic; Sonopress was moved to a division of Bertelsmann called Arvato that handles services.
The last executive from the old regime to leave the fold is George McMillan, who had headed BMG Direct since 1997 but was replaced by Goldfarb. Tuesday, CMGI announced that McMillan will join the Internet holding company as chief financial officer.
BeMusic stands to grow significantly in the coming months if it can agree to terms with Warner and Sony on a purchase of their competing record club, Columbia House. That would put the two largest record clubs under one roof.
