The Ando Media founder and current new media exec with Angel Street Capital says in his blog that broadcasters like Cumulus and Greater Media’s move to stream their signals with iHeartRadio is a feel-good strategy that terrestrial radio is doing something in digital, but he sees very little benefit for stations to “join and distribute their programming via this platform.” Most of the benefit–including controlling access and gaining user data to the content—he says goes to Clear Channel. Read his blog here:
What do Broadcasters see in iHeartRadio?
Is it extension of their brands? Is it increased advertising revenue? A new distribution platform? A number of broadcasters have agreed to have their internet streams added to Clear Channel’s iHeartRadio platform. Even though I believe in added distribution channels, there simply is very little benefit for stations to join and distribute their programming via this platform. Being added just means that you are one of more and more stations/channels on this increasingly fragmented platform. While stations may get to keep their in-stream audio ad revenue I’m sure Clear Channel is keeping all pre-roll and display revenue. Will this platform result in some added ad impressions and therefore revenue? Yes but not enough to buy a cup of coffee. Of the five featured stations today, all were owned by Clear Channel.
For Clear Channel this is a beautiful thing. They get content for free to add to the offerings on their platform to the consumer and take advantage of the effects of “the long tail” (No one broadcaster will benefit dramatically but Clear Channel may in the aggregate).
It appears that this is more a feel good strategy that terrestrial radio is doing something in digital. As I have noted before, Clear Channel is tiny compared with Pandora’s audience (about 15%). Based on Triton Digital December 2011 Internet Audio ranker, even if you added all of the top 20 terrestrial stations’ audience including Clear Channel it would still only be 42% of Pandora’s audience. What’s more, Pandora’s audience is increasing rapidly while the terrestrial stations audience has not increased over time.
RBR-TVBR observation: There’s no guarantee that Clear Channel is holding all of the display and pre-roll inventory (actually there is not much pre-roll going on anyway). We’re not sure broadcasters like Cumulus and Greater Media would go for that. We think they are signing on with iHeartRadio because it is the only game in town for broadcasters to add their signals to an existing in-dash platform—one that’s made progress for getting radio stations streaming in the dash. As more streaming audio platforms show up on the dash of different car lines, radio wants to keep itself there as well: consumers are gravitating to streaming audio. So far, iHeartRadio is in Toyota vehicles, via its Entune system: 2012 Tacoma, Camry and Prius V. Its BlackBerry app is also now compatible with Ford’s in-dash Sync system–most every model in the Ford and Lincoln-Mercury line (drivers can listen to iHeartRadio content and control playback via voice commands).
As well, stations that end up in the dash will allow listeners to keep listening to wherever they drive or travel to. That’s value added to terrestrial broadcasters and their advertisers. Yes, listeners can stream audio directly to car stereos via an MP3 jack or iPod FM transmitter, but having voice command and/or pushbutton access in the dash is going to score more listeners.