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In the past decade there have been more changes in audio entertainment than in the three previous decades. Satellite radio, HD Radio, Internet Radio and greater smart phone integration have all combined to give consumers more choices than they ever had before. The latest development, smart phones connected to the car dashboard, have really ramped things up for companies like Pandora (P), Slacker, Spotify and Clear Channel's (OTCQB:CCMO) iHeartRadio. Total smart phone integration is still in its infancy, but the capabilities that such integration will allow are far reaching.

The Echo Nest has now announced that it will provide Clear Channel with specialized technology that will turn iHeartRadio from a conglomeration of terrestrial radio stations fed over the web to a service that allows users to create fully customized radio stations. This would put iHeartRadio in a head to head match up with the likes of Pandora and Slacker. With billions of data points connected to millions of songs it will be very interesting to see how Clear Channels customization features compare to the rest of the audio entertainment world.

The concept is that a user can input a song or artist and a customized channel can be built upon that selection. Earlier this year Clear Channel purchased Thumbplay for the purpose of adding "Pandora-like" features. Sirius XM (SIRI) is getting ready to launch satellite radio 2.0 which also boasts more "Pandora-like" features. With the combination of The Echo Nest and Thumbplay Clear Channel is obviously gunning to make iHeartRadio a consumer favorite.

Clear Channel is looking to launch a new iHeartRadio app in the next week or so, and you can be sure other companies will be watching the download activity closely. There are various segments in audio entertainment. Free services supported by advertising find themselves stacked up against subscription models as well as the variants in between.

There are some that downplay the dynamics happening in the world of audio entertainment. As someone who covers satellite radio I see this all of the time. I firmly believe that Clear Channel has been perhaps the biggest factor in this segment over the past six months. From the day it acquired Thumbplay six months ago, Clear Channel has had laser-like focus on launching and building an audience for the Internet radio side of its business. The company has partnered with auto manufacturers such as Toyota (TM) and even announced a massive music festival in Las Vegas. The company also has the advantage of mass marketing iHeartRadio to millions of listeners to Clear Channel terrestrial radio stations every day.

At one point I pondered whether the combination of Pandora (mostly music) and iHeartRadio (music, news, sports and talk) with side by side apps in Toyota cars could be a threat to Sirius XM. Many scoffed at the idea, but now it appears Clear Channel is adding more pressure by getting the "Pandora-like" customization to market faster than anticipated.

While the final iHeartRadio business model is not yet cast in stone, the very fact that they were able to roll this out with the speed and exposure they have is quite telling. One thing is certain. Clear Channel has set the bar quite high.

Regardless of whether you are a Pandora investor or Sirius XM investor, there is no threat that Clear Channel will put these noble warriors out of business. There is room for several viable services in this marketplace and the core audience of each is distinct enough to allow all to prosper. I would say that what Clear Channel is currently doing is more of a direct play into Pandora's territory, but a stronger iHeartradio will grab potential ears simply by sheer volume and exposure. I do not see an exodus happening from the likes of Sirius XM or Pandora, but I do see it now becoming harder to attract a new consumer to any one of these services simply because of the quality of choices available.

The savvy investor will watch Clear Channel closely over the next several months.

Disclosure: I am long SIRI.

Additional disclosure: I have no position in Pandora.

Source: Clear Channel's iHeart Radio To Apply More Pressure To Competitors