The paid streaming service, the first of its kind for a traditional radio outfit, will include a $5-a-month ad-free radio station and a $10-a-month on-demand music service, according to people familiar with iHeartMedia’s plans.
IHeartMedia Chief Executive Bob Pittman is expected to make the announcement during the company’s music festival in Las Vegas this week, sources said.
The moves come as Pandora recently took the wraps off its $5 service and Amazon is expected to do the same for owners of its Echo device.
iHM, however, is planning to build different functionality for its $5-per-month service, including off-line play, sources said iHeart will get a toehold in the lucrative subscription business and a direct credit card relationship with its listeners.
Digital music subscriptions rose by 50 percent last year, and paid streaming is set to grow from $2.2 billion in 2015 to $12.7 billion by 2020.
The San Antonio, Texas-based company has already built a sizable digital business with its iHeartRadio app that lets consumers stream the company’s 850 radio stations — which is expected to continue when the paid service is introduced.
The radio giant, however, has been figuring out how to navigate a more mobile digital music world that requires it to pay for a music on less favorable terms than its current terrestrial business, which reeled in $6.24 billion in revenue in 2015.
The paid streaming service will require new licenses from the major labels, and iHeart is negotiating directly with those, sources said, rather than opting for statutory radio licenses.
According to the Post, yhe terrestrial radio business has been in turmoil in recent years as streaming services, including Pandora, Spotify and Apple, steal away listeners. IHeart has the additional issue of $21 billion in debt and stagnant revenue over the six months ended June 30.
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