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Clear Channel Buys Thumbplay At Bargain Price

image from www.writeonnewjersey.com Early Monday, news broke that subscription music service Thumbplay is getting sold.

After less than one year in the sector, its burning money and in need of a lifesaver.

Hypebot has since learned that Clear Channel Radio is buying Thumbplay at a bargain price.

And no, it is not entering the subscription sector.

Instead, the company is looking to leverage Thumbplay's technology and staff to build out its existing Web radio service, which places them in competition with Pandora. Clear Channel investor Bob Pittman told Media Memo that it needs to get ahead of the digital curve and not behind it. Buying Thumbplay and integrating its technology into their "iheartradio" service is step one. Eventually, Pittman commented, Clear Channel may get into the subscription business, but not now.

This news comes as Pandora nears an IPO and is striving to chop into the in-car market of commercial radio. Apparently, Clear Channel has been watching Pandora closely; it will use its "25 million monthly uniques" to complete with them. Pitman remarks, "Pandora is a great feature rather than a business."

Commentary

Prepare for an all-out war. Unfortunately, even with a $100M IPO, Clear Channel still has the power to out-market and spend Pandora at every corner. But, one thing is certain, Pandora is loved. That much can't be said about Clear Channel.

The other factor is that Clear Channel will encounter the Hulu problem. If their revamped "iheartradio" app starts to take listeners away from traditional radio, without bringing in the same revenues, it will be tempted to cripple its own future.

If killing off the future of your business is the only way to preserve the future of your business, then, like the major labels, you're screwed. Just because Clear Channel sees the writing on the wall doesn't mean that it won't destroy the wall.

By rule, the company can't make an experience that's better than radio. That would kill radio. Hell will freeze over before it contests its own business model.

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