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Investors have been pitting Pandora Media (NYSE: P ) against Sirius XM Radio (Nasdaq: SIRI ) since last month's IPO of the leading music-streaming website. The power of customized ad-fueled music streams putting up its dukes against premium coast-to-coast content will make up a pretty good fight for your eardrums in the years to come.
What if a third -- and highly unlikely -- contender enters the ring? What if a familiar, old-school, fuddy-duddy, widely despised media giant is able to brush itself off as something shiny and new?
Clear Channel (OTC: CCMO) came through with some interesting news this morning.
Ryan Seacrest introduced the iHeartRadio Music Festival in Las Vegas, taking place during the final weekend in September. Some of radio's biggest stars across Clear Channel's genres -- Lady Gaga, Coldplay, Black Eyed Peas, Aerosmith's Steven Tyler -- will be there in what is being billed as "the biggest live music event in radio history."
The two-day music festival will be broadcast through Clear Channel and the iHeartRadio app that is now available on all four of the leading smartphone platforms.
The music festival should increase the visibility of Clear Channel's iHeartRadio app. In a nod to the terrestrial giant's social marketing prowess, access to presale tickets will be available this week to music fans who "like" its fan page on Facebook.
The music festival will be a pretty big deal. Did I mention that Alicia Keys and Jane's Addiction will be there? J. Lo and Kenny Chesney? Sting and Usher?
However, that's not even the "interesting" news that will keep Sirius and Pandora on their niche-leading toes. The festival may be big, but it's not as big as what the festival is being staged to promote!
What streams in Vegas
Despite Clear Channel's nasty rep as the juggernaut of commercial-laden terrestrial radio with its wafer-thin playlists, iHeartRadio has been one of music's more popular downloads on Apple's (Nasdaq: AAPL ) App Store since its 2008 rollout. Versions for Android, BlackBerry, and more recently Windows Phone 7 have been subsequently introduced.
The allure of iHeartRadio is that it streams more than 750 of Clear Channel's local terrestrial stations wherever an online connection can be established. Smartphones, tablets, and even computers -- of course -- can go on an aural road trip to cherry-pick the AM and FM channels that they like best.
The personalized music-discovery engine of Pandora and the deep commercial-free play lists of Sirius XM haven't lost a whole lot of sleep over iHeartRadio in the past. There are plenty of listeners to go around, and who would fear terrestrial radio's desperate attempt at relevance these days?
Well, the music festival is set to coincide with fall's refresh of an updated iHeartRadio app.
"The new version is everything you want in one place," Seacrest revealed this morning.
"Real radio stations from cities across the country, and coming soon custom radio like Pandora but with more songs, more control, and no commercials through the end of the year."
Yes, iHeartRadio is calling out Pandora by name. Going the commercial-free route through at least 2011 will also challenge Pandora to scale back on its ads, likely explaining why Pandora opened lower than the general market today.
The refresh also seems to steal some of the thunder behind satellite radio's upcoming Sirius XM 2.0 platform, too.
A Sirius challenge?
There's a lot riding on the new receivers that Sirius XM will begin rolling out later this year. Sirius XM 2.0 will reportedly be a slick Android-fueled platform that will tack on more music channels, TiVo-style time shifting, and on-demand features of its more popular programming.
Sirius XM seems all but set on raising its monthly subscription plan prices next year, so it can't afford a free ad-supported service to muscle in on its premium turf.
Streaming is still not a perfect substitute for terrestrial or streaming radio. The technology is there, but the connections are unreliable and too slow. This will never be a "winner takes all" market, and the fact that Pandora, Sirius XM, and Apple's iTunes have all grown nicely over the past decade bears that out.
Ultimately, though, there are only so many eardrums to go around. Perhaps iHeartRadio will simply eat into its Clear Channel audience. Clear Channel's radio stations reach out to more than 100 million listeners, a figure that is larger than Pandora and five times bigger than Sirius XM. Listener loyalty may not to be as passionate as fans of Pandora or Sirius XM, but it will be able to promote its updated streaming app to a larger audience in theory.
This could naturally also end badly for Clear Channel. The iHeartRadio app may spoil traditional listeners that had no choice but to put up with long commercial blocks through terrestrial stations before. There's also no assurances that music fans wooed to the updated app this fall through the festival will stick around if ads do come back with a vengeance come 2012.
Clear Channel can still blow this, is what I'm saying -- though it certainly has my attention now.
Will the new iHeartRadio app be a bigger threat to Pandora or Sirius XM? Share your thoughts in the comment box below.