BMG vows to rewrite industry rulebook.

BMG president/CEO Rolf Schmidt-Holtz has outlined plans for a radical reshaping of its global operation, as it aims to convince Bertelsmann that music is a viable business.

Schmidt-Holtz addressed the major's UK operation for the first time last Thursday in a move he says was about "opening dialogue with management, discussing our common goals and values and listening to their concerns".

"In our meetings, we made clear that our future is based on the core values of BMG which are facing reality, leadership, passion and team spirit," he says. "Our management has embraced these values, and the results are showing."

COO Michael Smellie flagged up long-term targets of a 10% profit return and global market share of 15%. However, he confirmed that -- while the vast majority of its cutbacks have been concluded in 2001 -- it still plans to withdraw from further under-performing markets.

The UK meeting -- staged by Schmidt-Holtz, Smellie and BMG Europe president Thomas Stein -- was designed to communicate plans for a new business model which will create a company unrecognisable from traditional record company structures by 2004 to 2005, says Smellie. A series of proposals has already been approved in outline by Bertelsmann chairman and CEO Thomas Middelhoff, subject to a validation process which Smellie believes will be completed by the end of this year.

Smellie says, "We are looking at a new business model, a fundamental shift in our economics and, ultimately, the industry economies. Our discussion [on Thursday] with the people was to start the process of saying `Here is our thinking, here in a conceptual way is what our ...