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Bertelsmann CEO gives insights into European media moves

30 April 2014

From The Financial Times:

Europe’s biggest media group has a problem. It is a family-controlled German conglomerate competing in a digital age dominated by Amazon and Apple. One of its peers, publisher Axel Springer, has confessed to being “afraid of Google”. Another, France’s Vivendi, is breaking up after investors judged it less than the sum of its parts.

. . . .

Since his promotion to the top job in 2012, Bertelsmann has merged its book division Random House with rival Penguin to create the world’s biggest publisher by sales, Penguin Random House (which is part-owned by Pearson, owner of the Financial Times).

. . . .

All those moves were intended to allow Bertelsmann to grow in the new media landscape. “Until two years ago at Bertelsmann, digitisation was primarily seen as a threat and not an opportunity,” says Mr Rabe, who has been with the group since 2000. “People were looking for this famous red button to press to stop digitisation.”

. . . .

“In the past people told me, ‘Thomas, never touch the German [book] club business’, or ‘never sell the Chinese club business’, or ‘you can’t reduce headcount in Gütersloh’.

“We’re in the process of shutting down the German book club, large parts of it. I liquidated the Chinese book club during the Olympic Games in 2008 when it attracted less attention,” he says.

Link to the rest at Financial Times (behind paywall, sorry)

PG says the European media execs generally don’t do interviews very well. He cringed whenever the CEO of the European media conglomerate for which he formerly worked got anywhere near a reporter.

“Shutting down the German book club” may make the earth move in Gütersloh, but it doesn’t exactly give PG goosebumps.

Big Publishing, Non-US

6 Comments to “Bertelsmann CEO gives insights into European media moves”

  1. “Until two years ago at Bertelsmann, digitisation was primarily seen as a threat and not an opportunity,” says Mr Rabe, who has been with the group since 2000.

    This quote says it all.

  2. you can register your email at FT and get 12 free reads a month. Make sure to uncheck boxes permitting the sending of ‘notices’ and other c.

    The article was interesting mainly because the company goal is to do 18B additional annual by 2018 via bringing in ‘more’ bestsellers in music and books– and other ‘expansions.’

    Their digital person left because of lack of enthusiasm for his views. The push is to digital education market, which if B is smart will bring prices of textbooks to ten dollars or less vs 100-150+ for each textbook now still in place at many u bookstores. However, there are other textbook publishers who already have digitized textbooks and brought the price down. Look for B to buy those outfits to rid the competition and dominate.

    The humongous reach of B, a former supporter of dark times in Germany and the world via pre/during and post WWII , into CHina, Eu, North and South Am and elsewhere, is empiric, a word that ought be related in this case, perhaps, to vampiric.

    Their business is not delivery, not music, not literature; it is making money solely for the Mohn family who owns B. The article makes it clearer than clear. Yet, I note the FT piece does not say anything about taxes paid by the Mohn empiric in the many countries they inhabit.

    The article says expansion is the key action now, which means imo, usually, contraction and laying off, firing and closing other units down or cannabalizing them, in order to fund the ‘expansion.’ We’ll see. The FT article/interviewer was good, actually gives far more in depth/unguarded look at B than one would normally find in pw, wsj, nyt, etc.

    • Uhm, the Nazis actually did close down Bertelsmann in 1944, though it was because of alleged corruption rather than political issues.

      • Uhm, from the BBC, you can google it: Here is part…

        “Bertelsmann published texts glorifying Nazis
        German media giant Bertelsmann has admitted it lied about its Nazi past and that it made big profits during Adolf Hitler’s reign in Germany using Jewish slave labour.
        A commission set up by the firm found Bertelsmann rode the rise of the Nazi party to restructure itself from a religious and school book publisher to supply millions of anti-Semitic texts.

        I would like to express our sincere regret for the inaccuracies the Commission has uncovered in our previous corporate history

        Gunther Thielen
        Bertelsmann
        “Bertelsmann published a variety of papers and books that clearly had anti-Jewish bias,” Independent Historical Commission (IHC) Chairman Saul Friedlaender, an Israeli historian, told a news conference.

        The IHC found Bertelsmann had targeted the youth market with its “Exciting Stories” series and the “The Christmas Book of the Hitler Youth” annual which pushed its sales up 20 fold.

        The IHC said the company’s “legend” that it was a victim of the Nazis was a lie.

        Faking it

        The Nazis shut down the company in 1944, but probably because of war shortages rather and not because of subversive texts, it said.

        “In 1945, the legend that C. Bertelsmann was closed down because of resistance to the Nazis smoothed the way for the occupation authorities promptly granting the firm a new licence to publish,” the report said.

        The Commission found that Bertelsmann made “indirect” use of Jewish slave labour in Latvia, and Lithuania but not at its German headquarters.

        The then head of the company, Heinrich Mohn, also made donations to the SS, Hitler’s special forces and concentration camp guards.

        “True, he never joined the Nazi party, but his membership in the SS patrons’ group signalled his readiness for a political arrangement,” the report said.

        The company had close ties to the Nazi regime, particularly the Propaganda Ministry, and printed 19 million books during World War II, making it the largest publisher for the German army.

        The company immediately issued a statement apologising for its wartime activities and false corporate history.

        “The values of Bertelsmann then are irreconcilable with the company today. The company is now a global player in the media industry,” Tim Arnold, the corporate secretary of Bertelsmann told the BBC’s Today programme…”

  3. Well, shutting down the Bertelsmann Book Club may not be a big deal for you, but it is a big deal in Germany, because the Bertelsmann Book Club was pretty much ubiquitous in Germany of the 1950s, 1960s and 1970s. Most elderly people will have Bertelsmann Book Club editions on their shelves and every used bookstore or flea market is full of old Bertelsmann Book Club editions. The Bertelsmann Book Club made books affordable and accessible to millions of people in postwar West Germany.

    I’m not actually sad to see the Bertelsmann Book Club go, because the concept was seriously outdated. However, it was still going strong until very recently. In Germany, the marketshare of online booksellers like Amazon overtook that of traditional mail order book clubs like Bertelsmann’s only in 2008 or 2009. Indeed, the physical Bertelsmann Book Club stores are still around, though they seem to have morphed into regular bookstores rather than “members only” shops. They have an online presence as well and even sell e-books as part of the Tolino alliance. Looks to me like they are adapting nicely to the new world.

    As for the jab about Gütersloh, you regularly complain about big publishers with their Manhattan offices and now you complain that a global media corporation is headquartered in a midsized German city. So where should big publishers have their headquarters?

  4. The first rule about German Book Club is that there is no German Book Club…

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