Introduction
Supply chain is a system of a company involved in moving products or service from supplier to customer. The radio industry consists of broadcasting stations, networks and syndicates that transmit audio programming through AM, FM and satellite radio channels (McGinley, 2017). In the radio industry, the supply chain includes creative development, production, promotion, and distribution. According to IBISWorld’s Industry Market Report on radio broadcasting, the radio industry has maintained its audience reach and slowly increased ad revenue (Radio Broadcasting, 2017). Technology advancement is an opportunity to enhance the supply chain of the industry, as satellite and digital radio are becoming more prevalent.
Company Background
iHeartRadio was created by iHeartMedia, a diversified media and entertainment company specializing in broadcast radio, digital, out-of-home, mobile, live events, and on-demand information services for national audiences (Reuters.com, n. d.). iHeartRadio was launched in October 2008, in New York. Its headquarters are located at 32 Avenue of the Americas in Manhattan (LinkedIn, n. d.). It is a free, all-in-one digital radio service that enables its users to listen to their favorite songs on live stations or create all-music custom stations featuring songs from artists they select and similar music (Crunchbase, n. d.). Today, iHeartMedia is the largest radio station group owner in the United States with 855 stations, both by number of stations and by revenue (The Top 25 Radio Groups, 2006). While iHeartMedia employs more than 20,000 people worldwide, the iHeartRadio team operates like a startup – maintaining a fast-paced, open-space and innovative environment. There are more than 10,000 employees working for iHeartRadio (LinkedIn, n. d.).
Company Assets
iHeartMedia, the creator of iHeartRadio, specializes in radio broadcasting. iHeartRadio is an online radio presence under iHeartMedia’s umbrella (Company Overview, 2014). iHeartRadio was rebranded from Clear Channel in 2014 (Sisario, 2014). Since 2008, iHeartRadio has expanded its online app version to more than 90 devices and platforms, such as App Store, Android, Sonos, Xbox 360, and webOS etc. (iHeartRadio, 2017). As a digital radio music service, iHeartRadio is reimagining radio with new technology in order to allow users to combine music discovery and music collecting at the same time. iHeartMedia is the first to leverage the power of radio and bring to market new and innovative ways to extend on-demand capabilities onto the iHeartRadio platform (iHeartMedia, 2016). In order to create more dynamic music subscription space, iHeartRadio has a license agreement with Warner Music group, Sony Music Group and Universal Music Group. In addition, iHeartRadio has agreements with independent record labels and distributors (iHeartMedia, 2016). These relationships attract more listeners who can develop their own playlists and remain deeply passionate about music. In addition, the corporation with other music entertainment companies will create new commercial opportunities that engage with millions of listeners who tune into iHeart everyday (Morris, 2016).
Business Model
According to the president of iHeartMedia Networks and iHeartRadio, Darren Davis, the strategy is to “just go everywhere” (Benes, 2016).
He wants to make it as easy as possible to take away all the possible friction for people who want to access those broadcast brands. As a digital music radio service, iHeartRadio uses its unique business model to help iHeartMedia expand its audience on online platform, creating deep relationships with consumers and providing the use of those relationships to advisers (Hill, 2015). One way iHeart has removed possible friction is by offering its app on more than 90 devices, including cars and wearables. And the company has broadened its scope by adding third-party podcast partners, making its programming available on TV and becoming the most-followed publisher on the live-streaming social platform YouNow (Benes, 2016). iHeartRadio combines on-demand options, music discovery and music collecting. In mid-October 2012, iHeartRadio launched online audio news, weather and traffic streams for 20 metropolitan cities, branded as “24/7 News” (Venta, 2012). iHeartMedia also focuses on outdoor advertising. It produces an annual outdoor event, The iHeartRadio Music Festival. The annual event has aired as a television special every year since its launch. According to Billboard, the main festival “showcases some of the most well-established artists in the genre” (Lipshutz, 2014). iHeartRadio is in intense competition with other music services, such as Pandora Radio, Spotify, and Slacker Radio, etc. Except for Pandora Radio, which offers pure music discovery, other contenders offer additional services. For example, Slacker and iHeartRadio have live-streaming terrestrial radio stations, and Spotify provides an enormous music library and the ability to share playlists (White, 2013).
Revenue Model
Programmatic advertising is one of the keys to the iHeartRadio revenue model. Programmatic is an important and expected method of ad-buying in the digital space. Advertisers can see great ROI on programmatic buying platforms (Hill, 2015). This allows iHeartRadio to receive more and more positive responses from the advertising industry. The iHeartRadio Music Festival and other live events held by iHeartRadio is another model to earn revenue.
These events draw thousands upon thousands of celebrants and generate many advertising opportunities. In 2015, the company’s revenue rose 2% to $846.8 million, attributed to sponsorship revenue, and other digital revenue. In order to increase its revenue, iHeartRadio continues to leverage the entire company’s expansive portfolio of products, media platforms, content and personalities to enable advertisers and partners to engage with consumers around the world (Festival Revenue, 2015).
The Challenge
The biggest challenge that iHeartRadio faces now is a debt problem. Even though iHeartRadio has a lot of glam right now, it is in deep trouble with debt up to $21 billion (Stroud, 2017). Many streaming music services have been forced to grapple with similar problems. iHeartRadio incurred net losses and had a negative cash flow from its operations so it needs to continually pay penalties on its debt (McLntyre, 2017). iHeartRadio clearly has the music figured out, now it needs to find a way to balance its books.
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