"The lasers can do anything you want them to," explains Bob Pittman, the CEO of Clear Channel, during a visit to his midtown Manhattan office. The tour includes a hallway that changes stations as you walk along it, touch-activated lasers that let you play different musical notes, and a holographic Ryan Seacrest who greets you as you step off the elevator. Pittman had been CEO of AOL, Six Flags, and MTV before he took over at Clear Channel, and understatement has never been his style.
"The lasers can do anything you want them to."
When discussing the the future of music, few people are talking about traditional broadcast radio. But iHeartRadio, the digital arm of Clear Channel’s sprawling media empire, seems to have found a way to thrive at a time when its peers in the record industry are struggling to make the transition into the mobile age. Today Clear Channel announced that it has passed 50 million registered users, a mark it reached in less than three years, much faster than rivals like Spotify or Pandora.
The iHeartRadio app lets users stream any of Clear Channel's broadcast radio stations and also create "custom" stations that generate a playlist of tracks based on a certain artist, song, or mood. Yesterday it released version 5.0, which focuses even more on the ability to personalize the app to fit a user's musical taste. The company won’t share how many of those registered users are active on the service each month, but Pittman points out it actually undercounts total usage in some ways. "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." The app has more than 345 million downloads, for example, and the iHeartRadio network recorded 97 million unique visitors in its last month.
"They must think we’re morons to pay somebody tens of millions of dollars to be a disc jockey."
Neither of the two biggest companies in the streaming music space, Spotify or Pandora, have managed to turn a profit yet. Pittman argues that iHeartRadio has an advantage, because it doesn’t have to rely on streaming music revenues alone. "I’ve got big stars like Ryan Seacrest, Elvis Duran, or Steve Harvey ... are all part of our stable. We pay for them one time, and if we can find new markets for them, we get more and more efficient."
The media and entertainment division of Clear Channel, which includes iHeartRadio, has been growing and profitable. But overall Clear Channel seems to be suffering through the same slump as many traditional media companies, with financial losses growing year over year. The gains from digital haven’t been enough to offset losses in it traditional radio and billboard advertising business, and most of its revenue is now going to pay down its mounting debts. "The company is just treading water," Spencer Godfrey, a debt analyst, told Bloomberg News.
"The company is just treading water."
Asked if he was worried about big players like Apple, Amazon, and Google pushing into the streaming music space, Pittman said it wasn’t direct competition. "The reason radio works so well is, whoever you listen to every day, when you’re driving around, that person becomes your companion. It’s hard for a service to really curate music and help you discover new things without having that relationship." There is data to back that up. A recent study found most consumers still discover new musical artists mostly through AM / FM radio, followed by friends and family and then YouTube.
That key difference, human interaction and conversation, Pittman argues, is what will continue to separate iHeartRadio from the rapidly multiplying music services being offered by the titans of tech . "The word radio is getting bastardized," he said of services like Apple’s iRadio. "I play a bunch of songs in a row, that must be radio, they must think we’re morons to pay somebody tens of millions of dollars to be a disc jockey."