iHeartMedia Announces Plans for Its Entry Into Paid Streaming

Gerardo Mora/Getty Images for iHeartMedia
Bob Pittman, Chairman and CEO for iHeartMedia, Inc. speakes during iHeartMedia Presents Seal At The 2015 ANA Masters of Marketing Annual Conference at Orlando World Center Marriott on Oct. 15, 2015 in Orlando, Fla. 

The two new services will compete directly with Pandora -- and everyone else.

Just a week after Pandora announced the relaunch of its mid-tier streaming product and rough timing for its forthcoming Spotify competitor, iHeartMedia has announced its own plans for the same, set for launch in January, 2017.

iHeartRadio Plus will, surprise, be a very similar product to Pandora Plus (psst -- it's in the name), described by the company as "enhancing the radio listening experience."

iHeartRadio All Access will be the company's on-demand streaming service, set to compete directly with Spotify, Apple Music, Tidal, Rhapsody/Napster, Google Play, and forthcoming services from Pandora and Amazon.

No pricing was announced for either, though $4.99 and $9.99 respectively is a safe bet. Both will incorporate iHeart's U.S. network of 858 traditional broadcast radio stations which, clearly, will also be a powerful marketing tool. However those stations are also the source of iHeart's biggest problem: financing them led to the company's outstanding $20 billion debt.

Digitally, iHeartRadio is far behind Pandora in at least one important metric: listening hours.  The most recently available listening hours for Pandora are broken down by quarter -- 5.3 billion hours over the second quarter of 2016 -- which, with some rough napkin math, has monthly listening hours at 1.76 billion. According to iHeart's website, the company's digital radio product generates about 127 million monthly listening hours. iHeart says it has 90 million registered users; Pandora had 250 million... in 2014.

Notably, iHeart's press release includes quotes from each major label CEO, something Pandora lacked when it issued a "good news" release last week that conspicuously left out Warner Music. (Pandora signed a deal with label later that week, after the label had, according to a source, secured better rates for its artists.)

It's all good news for the record business, which saw significant growth this year for the first time in nearly 20 years thanks to the streaming. iHeart's announcement is part of a "race to the middle" -- offering listeners products at $4.99 per month instead of the now-standard $9.99 in order to capture revenue from more casual fans -- and the result will likely be increased growth for the recording industry. As for songwriters... we'll get to that.