-- For 11 years, online radio service Pandora struggled to find an audience. Now Pandora is far and away the most used online radio service, and it has a registered user base of more than 100 million listeners who average 17 hours of monthly listening.
So is it too late for a rival to catch up?
Clear Channel Communications doesn't think so. The nation's largest radio operator — with a base of 237 million listeners and 800 stations in 150 markets — is seriously beefing up its 3-year-old iHeartRadio service. A major push includes top superstars Lady Gaga, the Black Eyed Peas and American Idol's Jennifer Lopez and Steven Tyler singing on the service's behalf.
IHeartRadio had been a way to listen to Clear Channel stations such as Los Angeles' KIIS and New York's Z100 in one place. Now it, too, has Pandora-like customization: Name your favorite artist or song, and iHeartRadio will create a custom station based on your tastes.
The revamped service had a soft launch last week via Facebook (you could listen only if you were a registered Facebook member) and is available to everyone today at iheartradio.com.
But the official "coming-out party" for iHeart 2.0 is at next week's iHeartRadio Music Festival in Las Vegas, a soldout two-day event, says Bob Pittman, Clear Channel's chairman of media and entertainment platforms.
"We wanted to do something so big and so massive that it got everyone's attention," says Pittman, a former CEO of MTV and AOL.
Pittman says the festival, which will cost "millions" to produce, will lose money for the company but pay off as a promotional vehicle.
Each Clear Channel property is touting iHeartRadio to its listeners, and the concert will be simulcast on one Clear Channel station per market and online at iHeartRadio.
A bigger song library
In selling the iHeart redo, Clear Channel says it has a much wider library of songs than Pandora: 11 million, compared with 900,000.
There's also a huge difference in how iHeart and Pandora are programmed. Pandora's smaller library is by choice, says Pandora founder Tim Westergren. Its acclaimed music programming is based on a system Westergren set up that has humans analyzing characteristics of songs (tempo, melody, mood) to pair with others.
"We rely on musicology," he says. "What makes for a good radio experience is a combination of familiarity and discovery. It's not like going into a record store and having infinite choices."
Like on Pandora, consumers on iHeartRadio can like or dislike a song — by giving it a thumbs up or down — to train the computer to recognize their tastes. It also offers custom tools that allow for discovery of new artists or more songs from familiar ones.
An iHeartRadio app will be featured along with Pandora on Toyota cars this year. And the company is looking to bring the app to connected TVs and other devices.
Clear Channel is embarking on this huge digital push because "We want to be where the listeners are," says Pittman. "If they're going online, or to mobile, we need to be there."
Kurt Hanson, editor of the Radio And Internet Newsletter, says Pandora's audience has "been growing at 100% a year," and the service is far too entrenched for Clear Channel to make a huge impact. "I don't think Pandora should be quaking in their boots," he says.
Phil Leigh, an analyst at Inside Digital Media, agrees. "This is something they should have done years ago. It's too late."
Pittman says that for all the talk about new media, digital accounts for only 3% to 4% of the total radio audience. "It's new, it's coming, but it hasn't made a major impact yet," he says. "But it's something as a company we need to investigate."
Westergren, for his part, is thrilled with the attention. "The largest traditional broadcaster is recognizing that personalized radio is the future," he says. "How cool is that?"
New look coming
Pandora plans to unveil an all-new look in the coming weeks.
The face lift, which is being rolled out slowly to Pandora users, puts a big blue shine on the main page, speeds up the song-loading process, and adds social tools for Pandora listeners to share their song likes and dislikes and what they're listening to.
"Music is a fundamentally social experience, so this is something we really wanted to work on," Westergren says. "We know there's a lot of activity waiting to happen."
His hope is that over time, by sharing more about the bands, Pandora will allow users to connect and interact with the musicians.
"This lays the foundation for what we hope to make happen in the near future."