Hilbers, who will lead the embattled music-swapping company into its new incarnation as a membership-based service later this summer, was most recently the executive vice president and chief administrative officer of BMG Entertainment, Bertelsmann's music division.
With Tuesday's appointment, Barry steps down after serving as Napster?s "interim" chief for the past 13 tumultuous months at the company. He will remain on Napster's board of directors.
"Napster and its founder Shawn Fanning created a cultural paradigm shift, using the Internet to bring together through file sharing the largest group of music fans ever assembled," Hilbers said in a statement. "The next step is to complete the task of transforming this phenomenon into a business that respects copyrights and rewards creators."
Hilbers takes on one of the most difficult jobs in the industry: re-energizing Napster even as a lawsuit brought by the recording industry continues to sap it of its legions of users who sought free and unrestricted access to music.
Recent studies from Jupiter Media Metrix and Nielsen/NetRatings show a sharp decline in use recently, as the company has taken more draconian steps to filter out works contested in lawsuits.
Not only must Hilbers stem the defections for the moment, but he also must convince Napster users to stay the course once the service becomes a legal, subscription-based entity.
Napster's file-swapping service has been largely out of commission since the beginning of this month, as the company has been working to streamline the latest version of its file-filtering system.
Despite the company's persistent woes, Barry did succeed during his tenure in wooing Bertelsmann. The German media giant, which owns one of the world's five major recording studios, took a stake in Napster last year, with the idea of creating a fee-based service.
The repercussions of the Bertelsmann investment have been rippling through Napster since the moment it was announced, but Tuesday?s appointment brings to an end any semblance of independence.
"Hank Barry has led Napster's evolution from its early days as a phenomenon of college dorm rooms to its profile today as the best-known brand in digital music," Thomas Middelhoff, CEO of Bertelsmann, said in a statement, adding that Hilbers is the choice to guide Napster during the launch of its paid service.
Hilbers' experience includes building and managing America Online, Netscape Communications and CompuServe services across Europe for five years.