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Pump Up the Volume

Clear Channel's iHeartRadio makes its play for the big stage

Clear Channel’s streaming service iHeartRadio is turning up the volume in an aggressive bid to take on red-hot Spotify and Pandora.

Over the past six months, Clear Channel’s digital service has recruited a slew of media execs, including president Tim Castelli (veteran of AOL and Google) and svp of marketing Holly Lang from Condé Nast. In July, longtime Microsoft veteran Rick Song was named evp of national digital sales. Song has been on a hiring spree of his own, tapping sales execs for Chicago and Los Angeles.

“Now that we have a leadership team, we are in the process of building our organization over the next six months,” said Song, who also pointed to Clear Channel’s artist relationships as a key competitive advantage. He cited September’s second annual iHeartRadio Festival in Las Vegas, featuring Taylor Swift and Green Day.

Clear Channel definitely has pushed its way into the digital music mosh pit. IHeartRadio’s app, which streams 1,500 terrestrial radio stations, along with digital stations and 15 million on-demand songs, is gaining traction. Since launching on Facebook last year, it’s attracted 20 million registered users and 5 million fans, said Song. The mobile app has been downloaded 135 million times since its launch four years ago. IHeartRadio also powers Yahoo Music’s radio service, which streamed the iHeartRadio Festival and continues to show highlight clips.

It all sounds impressive. But Pandora still commands 70 percent of the Web radio market and 6.6 percent of the total U.S. radio audience, per Triton Media, while Spotify this month scored a staggering $100 million from Coca-Cola in new funding.

While the competition is intensifying, the economics remain questionable for all. Unlike terrestrial stations, music-streaming companies pay exorbitant royalty fees to artists (which is why Clear Channel and Pandora are jointly lobbying Congress to pass a more favorable law). Also, the ad market is still paltry, and agencies don’t know what to do with Internet radio or how to value it. “The whole industry is struggling with this,” said Maribeth Papuga, evp of direct local activation at MediaVest. “You know people are using it. But you have to justify it.”

Clear Channel at least knows how to sell to radio buyers, she said. But interestingly, the company has positioned iHeartRadio as a national radio buy, as Pandora makes a regional push. “What we’ve been good at is being a local company,” said Song. “Now we’re going out there and saying, ‘What is the power of our total reach and audience?’”

Having a bigger sales team will help. But what iHeartRadio really needs is more listeners. “Once they gain scale, they’ll be poised to gain market share,” said Lydia Foy, managing director of local audio, Horizon Media.

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