Report: iHM Considering On-Demand Paid Tier

With consumer appetite for digital audio surging, iHeartMedia could be the next player to offer up a paid, commercial-free on-demand service.

According to InsideRadio, iHM appears to be gauging consumer interest in such a plan, sending out surveys to some users of its free iHeartRadio app, asking if they’re interested and how much they would pay for it.

While iHM is not launching such a plan quite yet, they could be laying the groundwork. According to an iHeartMedia spokesperson, the company has been “looking at new features and doing surveys and research in the marketplace about that particular option and a bunch of others for years.”

iHeartRadio currently counts about 80 million monthly users for its free online radio service. And while it has strong brand recognition and an impressive user base, if iHeart launched a paid, on-demand tier, it would enter a crowded, competitive marketplace.

Spotify counts about 30 million paid subscribers and has another 70 million users for its free, ad-supported plan, while Apple Music, which is subscription-only, has grown to 15 million users in less than two years. Pandora, in contrast, has about 80 million monthly users, but only a few million for its paid tier, Pandora One, which it is promoting heavily. And Amazon Prime, SoundCloud, YouTube, Google and Tidal all have their own music services, some paid and some free. That’s a lot of options already, but iHeart’s reach is unique in the industry, and analysts say growing user demand is fueling the expansion of digital audio services.

Glenn Hower

“Around a quarter of U.S. broadband households subscribe to a streaming audio service, while two-thirds of households use some kind of service, paid or free,” notes Parks Associates’ senior research analyst Glenn Hower.

iHeart’s business model is already different from pureplays, as it sells integrated ads for its radio stations on-air and online through iHeartRadio. Even so, a subscription service could provide an always welcome additional revenue stream.

If iHeart launched a paid tier, Hower notes the company would still be playing catch-up behind the more established players. “The big differentiator for iHeartRadio has been that it is a nationwide collection of local radio stations. That may not be enough anymore,” Hower says.