Bertelsmann's Schmidt falls on his sword

Andreas Schmidt, head of Bertelsmann's ecommerce group, has surprised the world by announcing his departure from the German media giant as the firm dismantles its freestanding internet businesses.

The company plans to fold its ecommerce arm into BeMusic, a new unit which includes its record club, music retailer and other music distribution interests.

Schmidt was the chief architect of Bertelsmann's buyout of Napster and was instrumental in developing the company's new media policy.

An outspoken critic of the record firms' attempts to crackdown on file sharing, the controversial Schmidt has so far not commented on the reasons for his departure.

Bertelsmann has spent the last few months sprucing up its sprawling media empire ahead of an expected stock market flotation in the next couple of years.

Earlier this year, the group said it would integrate its online bookstore Bol.com into its book club business, while this week, it moved its stake in internet agency Pixelpark into its media services unit Arvato.

Headquartered in New York, BeMusic will fall under Bertelsmann's DirectGroup division and will be headed by Stuart Goldfarb, previously CEO of BOL International.

Bertelsmann and Napster are developing a new secure service for online music delivery, but the launch date was recently put back until next year.