With an investment in iHeartMedia, Apple could finally catapult its Beats Radio offering into the mainstream. Let’s see how this plays out.
According to a new report, Apple wants a slice of the iHeartRadio pie.
Sources speaking with the Financial Times stated that the Cupertino company has explored a ‘tie-up’ with iHeartMedia. The move would boost its own streaming music service, Apple Music, not to mention the embedded radio station, Beats 1.
Talks come ahead of an upcoming deadline later on this month. The company is still struggling with $20 billion in debt, having filed for bankruptcy protection last March. In that mess, iHeart creditors have reached out to potential investors.
At the end of November, iHeartMedia will present its reorganization plan at a bankruptcy court.
Talks remain in the preliminary stage, so things could move in different directions. But iHeartMedia had reportedly pushed for Apple to take sizable equity stake worth tens of millions of dollars.
Should Apple refuse to enter into a direct investment in the bankrupt radio broadcaster, an alternate plan exists. A source claims the Cupertino company could instead enter into a multi-million dollar marketing partnership. That would give Apple less leverage, but save the company the stickiness of a direct investment.
Both companies refused to comment on the report.
iHeartMedia remains the largest traditional radio broadcaster in the US. The company operates over 850 radio stations in the country.
The Times pointed to an opportunity for Apple to seriously boost its existing music platforms.
“A partnership could see Apple Music’s Beats 1 radio station, which is only available through its apps, make its debut on broadcast radio. Extra distribution would give Beats 1 and Apple Music greater awareness among older audiences who are later adopters of streaming services. A deal would also put the Apple station into more cars or kitchens.”
Apple’s possible investment could allow the company to finally grow Beats 1. According to music industry executives speaking with FT, the Cupertino company launched the always-on radio station to boost subscriptions. Despite having major industry stars and DJs as hosts – Drake, Zane Lowe, Nicki Minaj – Beats 1 “hasn’t attracted the huge audiences the company had anticipated.”
A deal with iHeart could also allow Apple to increase its influence in the music industry. An unnamed industry executive described the potential investment a “power move.”
In recent months, Apple Music has followed Spotify’s footsteps, encroaching into the indie market.
Following its purchase of Shazam, the Cupertino company hired the founders of Asaii. The music analytics start-up broke down data from streaming music services and social media to find the ‘next Justin Bieber’. Asaii’s platform also provides managers and labels an effective recommendation algorithm based on listeners’ preference. Despite Tim Cook’s claims computer-generated playlists drain “the humanity…out of music,” Apple Music could finally compete against Spotify’s recommendations.
In summary, an acquisition in iHeartMedia could prove an effective weapon for Apple in the streaming music wars. Apple Music, friendly to major labels, could become a bigger launchpad for new acts, while building greater hype around new releases.
Featured image by Bhupinder Nayyar (CC by 2.0).