‘Molto Con Brio,’ Bertelsmann Tells Music Marketers

24 January 2003

Marketers at the world’s fifth largest music group, Bertelsmann-owned BMG, are set to be told in no uncertain terms to get their act together.

An internal review conducted by Rolf Schmidt-Holtz and Michael Smellie, respectively BMG chief executive and chief operations officer, is set to trigger a management upheaval which could involve the company’s president for Europe, Thomas Stein.

According to an indiscreet insider, Schmidt-Holtz is “disappointed” at Stein’s performance since his appointment last July to head BMG’s [then] lossmaking European unit. Before being handed this poisoned chalice, Stein had been responsible for BMG’s A&R and marketing – a position to which he may be invited to return.

A new package designed to slash the bureaucratic layers between senior management and artistes and revitalize sales and marketing has been drawn-up by Schmidt-Holtz and Smellie, and could be implemented almost immediately.

Although BMG’s so-called ‘Anglo-American repertoire’ has kept the euros flowing in the right direction, in other regions including its German backyard, a reverse flow in the first half of last year led to operating losses of €45 million ($48.33m; £29.84m) on sales of €1.17 billion.

However, analysts divine that H2 /2002 saw an emergence from the red ink to reach a full year profit of over €100m, good – but not good enough – to hit Stein’s margin target of ten per cent on BMG’s European revenues.

Word from within the bunker is that Stein will not be asked to leave the group, simply to step sideways. Insiders say he might welcome a return to his old role or fulfil a long-held ambition to head a music label. They do these things more elegantly in Germany!

Data sourced from: Financial Times; additional content by WARC staff