RealTime IT News

Bertelsmann to Stanch BOL.com Loss

German media company Bertelsmann AG is rolling its money-losing BOL.com online book sales unit into its considerably larger book and music club business in a cost-cutting move that reflects intense competition from Amazon.com.

The action includes the closing of the London headquarters as well as its Danish and Norwegian operations. Job cuts are expected but have not yet been announced. BOL.com is said to be Europe's No. 2 online bookstore behind Amazon.

"We have no details (on job cuts), yet we cannot exclude that it will happen," a Bertelsmann spokesman was quoted as saying in published reports.

The decision comes after privately held Bertelsmann scrubbed plans late last year to take the online book unit public as a separate company. It also follows a Borders Group decision in early April to relaunch its Borders.com business in a partnership with Amazon.

The reorganization will trim costs by slashing overlapping administrative and marketing operations with Bertelsmann's book club division, according to a spokesman.

Bertelsmann is hoping for more cross-selling, boosting online sales by attracting more club members and winning new club members from customers surfing the Web.

Bertelsmann is combining the two groups under the worldwide retail unit DirectGroup, which includes the music operation BMG.

The club division has also become a financial drain in recent years, although division chief Klaus Eierhoff was quoted this week as saying that it should return to profitability, excluding BOL.com, next year.

"It doesn't matter if in terms of a pure Internet player we are No. 1 or No. 2," he told the Associated Press. "The question in 2001 is whether you can offer all services to your customers through all channels."