InformationWeek.com

Welcome Guest. | Log In| Register | Membership Benefits

January 1, 2001

Printer ready

Innovators And Influencers 2001

BMG's Man On The Move

Andreas Schmidt plays a part in the music industry's digital awakening

By Tony Kontzer

Send Us Your Feedback

f all the professional tidbits associated with Andreas Schmidt, one stands out: The president and CEO of music publisher Bertelsmann AG's eCommerce Group logged more than 1.3 million air miles in 2000, jetting between Europe, New York, and Southern California. That fact alone doesn't tell you why he's positioned to have profound influence on the digital music industry in 2001, but it's a start.

Schmidt spent 80% of his working life thousands of miles from his wife and children in Hamburg, Germany. Much of that travel came while he was ironing out the now-legendary deal announced on Halloween with Napster Inc., a U.S. music-indexing service that lets individuals swap recordings over the Internet.

Andreas Schmidt Bertelsmann's BMG Entertainment unit broke ranks with the other so-called Big 5 labels--Universal Music, EMI Recorded Music, Warner Music Group, and Sony Music Entertainment--to forge its deal with Napster. While the other labels continue with their copyright-infringement suits against Napster, Bertelsmann has promised to withdraw its suit once Napster implements a subscription-based model for its controversial file-sharing service. That service has let music listeners around the globe develop digital music libraries for free.

Charged with shaping Bertelsmann's $13.72 billion companywide Internet strategy, Schmidt is bent on playing a significant role in his industry's digital awakening. "Schmidt is either a visionary, or he's really smart about figuring out which people are the visionaries," says P.J. McNealy, a senior research analyst with Gartner's E-Business practice.

MOST ADMIRED BUSINESS LEADER:
David Yoffie, a Harvard Business School professor; Steve Case, America Online CEO

STOCK TO ADD TO PORTFOLIO:
Napster

BEST BOOK READ IN 2000:
“When Genius Failed:
The Rise And Fall Of Long-Term Capital Markets,” by Roger Lowenstein

WANTS TO DO IN 2001?
Spend more time with children; spend less time in board meetings and on plane trips

MUST HAVE TECHNOLOGY:
3G mobile phone, “which unfortunately won’t work in the United States”

Schmidt, who headed AOL Europe from late 1998 to early 2000, has worked with Napster CEO Hank Barry and founder Shawn Fanning to develop that subscription model. Once Napster's revised service is unveiled, it will provide a template for online music distribution. As such, it could establish Schmidt--along with Barry and Fanning--as a driver of the new digital music era.

Schmidt says he's not in this for the celebrity status. Rather, he's focused on acting quickly, so the anti-Napster forces don't strike a blow against the file-sharing approach before it can become a legitimate distribution channel. Schmidt says whether that ultimately is accomplished by a Napster-Bertelsmann alliance or some other entity is unimportant. "There probably are three or four other Shawns out there already who might be doing other things that will have a similar impact in the end," says Schmidt, a former journalist. "It's absolutely vital to establish this, to take the consumer perspective, and to see the opportunities rather than the down side."

With a live-in focus group of devoted Napster users in the form of his 19-and 8-year-old daughters, Schmidt, 39, gets the expert feedback he needs. For instance, his oldest daughter's conflicted feelings--Is Dad cool for stepping in and potentially saving Napster? Or has Napster "sold out"?--helps Schmidt to keep a well-rounded perspective.

Even before the Napster deal, he had a record of nourishing change. At AOL Europe, Schmidt led the launch of the free Netscape Online site in Britain and the low-priced CompuServe Office service in Germany.

Once Napster rolls out its new service, Schmidt will turn his attention to other BMG media properties, creating electronic revenue streams for Bertelsmann's European television stations as well as its print and multimedia holdings.