Hilbers said he'd opted for "this very entrepreneurial challenge over the corporate role in the BMG organization," neglecting to wade into the intramural issues that led to his departure.


Ends CEO Hank Barry's 13-Month "Interim" Reign
Napster dropped a bombshell today when it revealed that former BMG Chief Administration Officer/EVP Konrad Hilbers has been tapped as its new CEO. The announcement ended interim CEO Hank Barry’s controversial and turbulent 13-month ride atop the frequently maligned file-swappery.

"This is not at all a change in direction," Hilbers underlined to journalists this morning, adding, "I don't come with a predefined set of opinions on the strategy of Napster."

German-born, Swiss-educated Hilbers’ appointment is a surprise to many in the industry. The former BMG exec parted ways with the German media giant in June, after just six months on the job (see story, 6/15); his performance was described by insiders as "disastrous."

While at BMG, sources said, Hilbers was criticized internally and externally for not understanding the music industry, sometimes antagonizing artists with business matters at inappropriate times and infuriating key label executives. Further, given that BMG parent and major Napster investor Bertelsmann is apparently pulling many of the company’s strings, the naming of the ousted BMG executive is somewhat bewildering, adding to the complex relationship between the two companies. BMG Sr. VP Michael Smellie was named COO of the company in June, effectively replacing Hilbers.

The new CEO underplayed the importance of his connection to the German company during this morning's conference call with journalists. When asked by HITS how the relationship between the netco and the media conglom might change on his watch, he stressed the importance of "independence" and chose to emphasize his experience with "the growth phase" of AOL Europe (in which Bertie owns a 49.5 percent stake). "We certainly think AOL is a very sound and competititve player in this field," he asserted.

"I'm very excited to take on this challenge at Napster," Hilbers related. "Obviously, I've been a consumer at Napster for a long, long time." While neglecting to say what files he'd swapped in his consumer phase, Hilbers did mention he'd met Barry during his tenure at BMG when the two worked together on negotiating licenses.

"Most importantly on my to-do list wll be to continue the cooperative way of trying to get licenses" for music and carrying forward the subscription-service plan, he said.

He added that he'd opted for "this very entrepreneurial challenge over the corporate role in the BMG organization," neglecting to wade into the intramural issues that led to his departure.

Though he mentioned his years "working closely with [Bertie CEO/Chairman] Thomas Middelhoff," Hilbers insisted there would be no "change of paradigm" at the online firm resulting from his background. "I'm dedicated to make this work for Napster, and obviously I also have responsibilities toward the capital partners, management and employees."

"I've seen how to build membership services, and I'm more than willing to apply that knowledge," he pointed out. The German exec also praised Napster co-founder Shawn Fanning, from whom he'll doubtless learn a great deal about Metallica.

Middelhoff himself issued a quote that went out with the announcement of Hilbers' assumption of the reins. "Konrad is a great choice to guide Napster during the launch of its paid service," it reads. "His experience in the Internet and music industries will enable him to effectively build on what Hank Barry has accomplished at Napster. Hank Barry has led Napster's evolution from its early days as a phenomena [sic] of college dorm rooms to its profile today as the best known brand in digital music. Now it is Konrad's job to implement Hank's plans and make this vision a reality."

Napster reps had said that they've been seeking a new CEO since the beginning of the year. Barry will remain on Napster's board while returning to work full time at his VC firm, Hummer Winblad.

Hilbers' appointment reflects the current stage in Napster's continuing fight for survival, preparing to compete as one of many fee-based digital music services expected to launch this summer. "His task will be to move us into an era where Napster is just a normal business," Barry told The New York Times.

Barry has been "interim" CEO of the notorious swapco for over a year, assuming the perch when Hummer Winblad pumped $15 million into the online company. "I told my wife I'd be taking the job for six weeks," he joked the conference call. While Barry's avuncular style endeared him to many journalists (he thanked them for "all their help" during the call)—and helped Napster gain sympathy in the mainstream media—his lawyerly defense of the company's fast-and-loose approach to copyright has infuriated many in the industry. In addition, Net-music "revolutionaries" derided his corporate approach.

"Hank is incredibly intelligent and talented, but an interim CEO is just that," former Napster VP Liz Brooks told HITS. "Like [his predecessor, ex-CEO] Eileen Richardson, who also brought huge value to the company, Hank was brought in to take Napster to a certain point—a place where it could build a real business and, instead of being a cultural phenomenon, become a company. This is a natural and very positive step for the organization to take."

Former Napster employees have said that Barry and his Hummer Winblad contingent entered the game with a large chip on their shoulders, arrogantly expecting Napster to win the lawsuits filed against it by the major labels (as represented by the RIAA). Many believe it was this presumptuous belief that prompted the company to put off building real relationships with the record industry until it was too late.

Even so, during Barry’s tenure, the hailstorm of music-biz litigation was balanced by a lucrative deal with Bertelsmann, incorporation into the online label consortium MusicNet, pacts with an array of indie labels and settlements with longtime Napster foes Metallica and Dr. Dre.

Barry successfully wooed Bertelsmann to invest, getting the German media giant to buy into Napster, surprising many in the music industry. With Bertelsmann's help, Napster still plans to launch a legal subscription service, which is slated to bow later this summer.

After Hummer Winblad’s investment, Barry was brought in to replace Richardson and monetize the widely popular free music service. But, because of the numerous copyright lawsuits and the music industry’s disdain for the netco, Barry’s attempts to produce revenue by inking deals with the major labels never came to fruition. The service has been shut down since the beginning of the month, as the company works to streamline the latest version of its file-filtering system.

Before joining Napster, Barry was an entertainment lawyer at Wilson Sonsini Goodrich & Rosati, serving as counsel to Disney, A&M Records and Liquid Audio, among others.

Simon Glickman contributed material to this story.

Redrawing the Mason-Dixon Line (5/21a)
Let's look under the hood. (5/21a)
It'll be here before you know it. (5/21a)
Art and commerce intersect. (5/21a)
The latest action from the live sector (5/21a)
Gosh, we hope there are more press releases.
Unless the Senate manages to make this whole thing go away, that is.
No, not that one.
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