“We set out to be a major player,” Clear Channel CEO Bob Pittman told USA Today talking about the company’s aptly named digital service. iHeartRadio began about three years ago and has just surpassed 50 million registered users, a benchmark it reached in less time than rivals such as Spotify and Pandora. According to Pittman, “That is just looking at the folks who use our custom radio feature, which requires an account. There are a lot more people who use our app to stream their favorite stations without ever signing up.” iHeartRadio, the second most popular streaming service after Pandora, is also updating its app to version 5.0 which connects users across mobile, tablet, desktops and auto dashboards. Brian Lakamp, the president of digital of Clear Channel, the app’s parent company, told Mashable, “Since we launched the custom station product we’ve been modifying the algorithm…to make it more of what you want, sooner.”
Like Pandora and other services, iHeartRadio offers users the ability to create personalized radio stations based upon an artist or song, but a unique core strength is its ability to stream digital feeds from many of the company’s almost 850 terrestrial radio stations which includes formats like talk, spots, music, news, and more. Clear Channel’s stations actively cross market the iHeart brand which Pittman characterized to USA Today as a “unique advantage.” In addition, iHeartRadio has its own countdown show, National Awards on NBC TV, and presents an annual Fall music festival in Las Vegas.
To date iHeartRadio has been downloaded 345 million times and last month recorded 97 million unique visitors. Last year the service averaged 143 million hours of listening per month. For comparison, Pandora totaled 1.73 billion listener hours in May 2014. According to a March 2014 Statista report, Pandora has about a 31% music streaming market share and iHeartRadio is about 9%.
Pittman told the Star Tribune the streaming service makes “hundreds of millions” of dollars in annual revenue, saying, “IHeartRadio would be a very valuable company on its own. In the grand scheme of things, it’s an extension of the other businesses we’re in.”
iHeartRadio is a rapidly growing Clear Channel priority, but the streaming music space is getting more crowded than a downtown bus at rush hour and is still very young. YouTube is reportedly set to introduce a streaming product and recently we saw Amazon Prime launch a service in competition with brands such as Beats, iTunes radio, Rdio, Spotify, Rhapsody, Pandora, Google Play Music, TuneIn Radio and more. How will these various brands differentiate themselves? What will the marketplace look like ten years from now?
Current royalty structures create another uncertainty because they force services into forms that meet either on-demand or webcaster legal definitions. However, it is yet unclear what form or forms best serve the consumer. For example, it seems reasonable to assume that on the way to work I want to hear the new Miranda Lambert album (on-demand), but later during my gym workout I look for a high energy playlist (webcaster), and maybe that evening want mood music to study by that sounds like Passenger (webcaster). Perhaps consumers want multiple options? USA Today asked Pittman would iHeartRadio consider adding an on-demand component to its service. “No.” he replied. “I’m not sure it plays to our strengths. We are known for radio, and we will continue to give you custom radio.” Time will tell if that is the right answer.