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To: Jan Crawley who wrote (52862)	4/26/1999 9:29:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164687

Internet rewriting competition rules-Bertelsmann STUTTGART, Germany, April 26 (Reuters) - The explosive growth of the Internet is rewriting the rules of international competition in media, the chairman of Europe's largest media company, Bertelsmann AG <BTGGga.F>, said on Monday. In a speech at the German Multimedia Congress, Thomas Middelhoff said the increasing importance of online technology and electronic commerce had presented the industry with a sea change comparable to the rise of television. Middelhoff said that Bertelsmann had long reformulated its strategy with the Internet and its accompanying globalisation of competition in its sights, a process that was still developing as new avenues open. "We have to get faster -- faster at recognising market opportunities, faster at the process of using new ideas in business," Middelhoff said. Middelhoff said that multimedia would become a mass medium similar in importance to television in a few years, especially in light of the increasingly blurring lines between television sets and online technology. He said the future would see televisions that allowed viewers to access information about coming programmes, order products and services and join in discussion with other members of the audience. Bertelsmann recently announced the launch of an intiative to speed the development of "web-TV" called the Bertelsmann Broadband Group, which aims to begin offering interactive online service for television sets by mid-2000. Middelhoff said that the Internet posed certain challenges to Bertelsmann's core business at the same time it offered important new channels for sales and distribution. He noted that the manufacturing and distribution costs of a digital encyclopaedia from Microsoft <MSFT.O> on CD-ROM were around $1.50 compared with $250 for the book version, meaning that companies like Bertelsmann had to replace some traditional business activities with investment in new growth markets like e-commerce. He added that the popularity that companies active on the Internet had enjoyed on international bourses was a development that threatened to stand in the way of growth in traditional industry areas. But he said that the online retail book market, in which Bertelsmann is represented with a stake in barnesandnoble.com and its BOL service, was growing at a rate of 160 percent annually. German e-commerce turnover is expected to hit about $1.7 billion in 1999 and $16 billion in two years, with even broader opportunities in customer relations, marketing and distribution. Middelhoff said that, including its recently announced online music selling venture getmusic.com with Universal Music Group <VO.TO>, Bertelsmann was now the world's second largest player in media e-commerce behind Amazon.com Inc. <AMZN.O>. REUTERS Rtr 13:34 04-26-99