A year later, he’d done just that, raising his already big bet on radio — a business that many would argue is in decline. Now, under his guidance, the nation’s largest radio broadcaster is implementing an aggressive digital music strategy in the hopes of stealing the online radio spotlight from Pandora.

In an interview with Kara Swisher at our D: Dive Into Media conference, Pittman chatted about Clear Channel, the future of radio and why social networking is one of its greatest allies.

“Radio is a party,” Pittman said, contrasting it with music-collection services like iTunes and Spotify, which are more individual experiences. “It’s like walking down the street and seeing a crowded bar and wanting to go in and socialize. One of the reasons radio does so well is that it’s inherently social.”

If that’s the case, how important are social networking services to Clear Channel’s future? Pittman said that some are more important than others, and the most important of all is Facebook.

“In terms of the social platform, Facebook is where you want to go,” Pittman said, noting that the company does partnerships very well. “Google is also trying to do social in other ways, but it’s just not a company that builds partnerships in the ways that we like to do them.”

Pittman continued, noting that radio is a much broader service now than it is perceived as.

“What we build in radio are these incredible franchises,” Pittman said. “However our listeners want to get to those franchises is fine — whether it’s radio or Internet or TV,” Pittman said. “Everyone’s trying to protect business models, but in the end it’s the consumer that rules, and we have to deliver the content to them however they choose to consume it.”

How worried, then, is Pittman about music services like Pandora and Spotify. Are they rivals?

“We look at other radio as competitors,” Pittman said. “We do compete with Pandora on some aspects, but music collecting is really not what we do. At the end of the day, we are radio people, we know how to curate. What you see with iTunes and Spotify is a new way of merchandising music. We don’t do that, nor do we have an expertise in it.”

Disney CEO Bob Iger tapped Skipper to take over his company’s most important asset just a week ago. But Skipper, who had been ESPN’s content boss, has been a rising star there for years, hopping from print (!) to the Web to TV programming. We’ll have his first onstage interview in his new role.

At a time when the value of Big Media’s content is in flux, ESPN’s lock on sports — DVR-proof, pirate-resistant programming that draws mass eyeballs in a niche age — is more valuable than ever. Can Skipper keep it that way?

We’ll ask him in January, as he joins a lineup that includes: YouTube CEO Salar Kamangar, Viacom CEO Philippe Dauman, New Yorker editor David Remnick, Warner Music Chairman Edgar Bronfman Jr., News Corp. Chief Operating Officer Chase Carey, Clear Channel CEO Bob Pittman, Legendary Pictures head Thomas Tull and Vevo CEO Rio Caraeff.

All Things Digital’s first-ever media conference runs Jan. 30 and 31 at the Ritz-Carlton in Laguna Niguel, an hour south of Los Angeles. See you there.

Hollywood and Google have been circling each other for years, as each side tries to figure out what to make of the other. Now they’re finally starting to link up in a serious way, via YouTube’s new “channels” strategy.

Which means it’s a perfect time to hear from YouTube CEO Salar Kamangar. And if you’re at D: Dive into Media in January, that’s what you’ll be able to do, as one of the world’s most important Googlers joins us onstage.

Getting Kamangar out of Mountain View and into the public eye would be a big deal under any circumstances, because — while he keeps a very low profile — he has enormous clout: He’s one of Larry Page’s most trusted lieutenants, a position he has earned by joining the company as hire No. 9 in 1999, then helping to build the AdWords product that has generated a vast majority of Google’s revenue.

Kamangar has been formally running YouTube for the past year, but in reality he had been overseeing the world’s largest video site for some time. Kamangar is also in charge of Google’s broader video plans, including Google TV, which is now making a second stab at inserting itself into the world’s living rooms.

So there’s going to be plenty to talk about when Kamangar joins a lineup of media heavyweights Jan. 30 and 31 at the Ritz-Carlton in Laguna Niguel, an hour south of Los Angeles. Previously announced speakers include Viacom CEO Philippe Dauman, New Yorker editor David Remnick, Warner Music Chairman Edgar Bronfman Jr., News Corp. Chief Operating Officer Chase Carey, Clear Channel CEO Bob Pittman, Legendary Pictures head Thomas Tull, and VEVO CEO Rio Caraeff.

We’ll announce more in the weeks to come. If you want to make sure you get a seat, you should sign up now.

For our first-ever media conference, we’re trying to cast a wide net, so you’ll hear from movers and shakers from a range of companies. The common theme: All of them are making and distributing content during a time of unprecedented technological change. How do they adapt?

So far, we’ve announced that Viacom CEO Philippe Dauman, New York editor David Remnick, Warner Music chairman Edgar Bronfman Jr. and News Corp. chief operating officer Chase Carey will be joining us on Jan. 30 and 31 at the Ritz-Carlton in Laguna Nigel, just south of Los Angeles.

Let’s add three more to that list:

Bob Pittman helped build MTV, then AOL. And after spending several years as a full-time investor in everything from Zynga to a high-end tequila, he’s running a media company once again — this time overseeing radio and billboard giant Clear Channel. Why would you want to run a radio company when everyone’s consumed with the likes of iTunes, Pandora and Spotify? Because it’s still a growth industry, Pittman argues. And the fact that it’s the industry that gave him his start, at age 15, makes the story even more interesting.

Thomas Tull is a relative newcomer to Hollywood, but he’s moving fast. After founding Legendary Pictures in 2004, he’s produced a string of hits, including “The Hangover,” “The Dark Knight” and “300.” And if you accuse him of making dude-centric movies that appeal to “fanboys,” he won’t flinch — they’re the ones who still come out to the theaters, if you know how to get them there. Last spring, his track record helped him secure an investment from Silicon Valley heavyweight Accel Partners, which gives you a hint about where Tull thinks all of this is going.

Joint ventures formed by big media companies are a tricky proposition, but Rio Caraeff seems to be making his work. Vevo, the “Hulu for music videos,” is co-owned by Universal Music Group and Sony Music, and helped in large part by Google’s YouTube. And as of last month it was the second-biggest video site on the Web — a title that used to be held by Hulu.

Just like our flagship D: All Things Digital conference, D: Dive into Media will give you rare access to deep, smart talks with the people who matter. And we’ll be announcing more of them in the weeks to come. For now: You can find registration information here.

Jared Grusd, AOL’s SVP of business development and chief of strategy, is leaving the New York Internet giant to work at Spotify, according to sources close to the situation.

At AOL, according to his bio, Grusd “oversees the organization responsible for all domestic and international strategic partnerships and commercial alliances for AOL and each of its operating units. He is also responsible for identifying and evaluating new corporate strategies and opportunities for the company.”

The marathon fiend and former Google exec — who held top legal-deal jobs there — also serves on AOL’s Executive Management Team.

It is not clear what the well-respected Grusd will be doing at the online music service, which has been expanding its executive ranks as it has moved aggressively into the U.S. market. But sources said it was a high-level position in New York.

Spotify recently hired former Clear Channel exec Gerrit Meier as GM of distribution and partnerships, reporting to U.S. head Ken Parks.

Spotify also just scooped up former AOL sales head Jeff Levick — another Google alum — as its chief advertising officer.

The departure of Grusd further thins out the exec ranks at AOL, which is still mired in a turnaround under the leadership of CEO Tim Armstrong (yes, he too is a former Googler!).

I lobbed a query into AOL PR for comment, and am awaiting news of my news.

Last month, the music subscription service hired a new sales boss: former AOL executive Jeff Levick. And now it has brought in someone to head up business development: Gerrit Meier, one of Clear Channel’s top digital executives.

Spotify confirmed that it has hired Meier, the former chief operating officer of digital at Clear Channel Radio, as “GM Distribution and Partnerships,” and that he’ll report to U.S. head Ken Parks in New York.

People familiar with his hire tell me his big-picture job is to put together international distribution and partnership deals. If, for instance, Spotify wanted to partner up with Verizon Wireless on a subscription package, he’d be the guy in charge of that.

Longtime media and Internet exec Bob Pittman has been named CEO of radio broadcast and outdoor advertising giant Clear Channel, the company announced today.

Pittman — who has been chairman of Clear Channel’s media and entertainment platforms after making an investment in the company less than a year ago — will join the board of directors of CC Media Holdings, Clear Channel Communications and Clear Channel Outdoor Holdings, as executive chairman.

Clear Channel’s holdings include a huge parcel of radio stations across the U.S., along with a number of digital properties and a big global outdoor advertising business.

Pittman — the former MTV wunderkind who started in radio at 15 years old as an announcer at a station in his native Mississippi — has not been in a top job like this one since he resigned from the then-AOL Time Warner as its COO in the midst of the botched merger mishegas almost a decade ago.

Since then, Pittman has been doing a range of things, including making canny investments in a variety of Internet start-ups such as Zynga and DailyCandy, and even in a high-end tequila company via the Pilot Group, a New York-based private investment firm.

He made his own investment in Clear Channel last year and has since upped his involvement, which resulted in the latest move to CEO.

“I swore I would never work like this again, but when something gets me this stimulated, I knew I wanted to get into it again,” said Pittman, in an interview with me yesterday. “I think this company has everything it needs to be a great media company in the new media landscape.”

That will include a range of new initiatives, including recent partnerships with Facebook and more.

“We want to move like an entrepreneur and have the assets of a big media company,” said Pittman. “I am an addict for this challenge.”

Here’s the official press release from Clear Channel:

BOB PITTMAN NAMED CEO OF CC MEDIA HOLDINGS

Appointment Underscores Clear Channel’s Evolution to a Fully Realized, Integrated Media, Digital and Entertainment Enterprise

Media Pioneer Will Oversee the Company’s Global Media Properties, including Broadcast, Digital and Mobile, Syndication, Media Representation and Outdoor

New York, NY — October 2, 2011 — CC Media Holdings, Inc. (OTCBB: CCMO), a leading global media, digital and entertainment company, announced today that Bob Pittman will become its Chief Executive Officer. Pittman joined Clear Channel in November 2010 as an investor and the company’s Chairman of Media and Entertainment Platforms. Pittman will join the Board of Directors of CC Media Holdings, Inc. and Clear Channel Communications, Inc.; in addition, he will join the Board of Directors of Clear Channel Outdoor Holdings, Inc., as its Executive Chairman. These appointments are effective immediately.

In his new role, Pittman will oversee the company’s businesses, which include:

Clear Channel Radio, which serves 150 cities through 850 owned radio stations and an additional 100 cities and 4,000 stations through its syndicated Premier Radio Networks products. Clear Channel Radio also includes:

* Clear Channel Digital, which develops and operates iHeartRadio, the free, industry-leading digitalradio product that combines access to all of Clear Channel’s live broadcast and digital-only radio stations as well as user-created Custom Stations. Clear Channel Digital also develops the companion digital products for each radio station brand, including strong social components;

* Media Services for the radio, media, digital, mobile and music industries, including Total Traffic Network, a groundbreaking programming and technology service delivering real-time traffic data to vehicles via in-car and portable navigation systems, broadcast media, wireless and Internet-based services; The Katz Media Group, the leading media representation firm in the US for radio and television stations; and RCS, which provides scheduling and broadcast software for radio, internet and television station in addition to research studies that aid the media and music businesses.

Clear Channel Outdoor Holdings, which is one of the world’s largest outdoor advertising companies with close to one million displays in over 40 countries across five continents. Clear Channel Outdoor includes:

* Americas Outdoor Advertising, which owns or operates nearly 190,000 displays across the United States, Canada and Latin America including operations in 49 of the 50 largest markets in the United States. The Americas businessconsist of various types of displays that include billboards; street furniture; transit displays; the Clear Channel Airports division, which is the premier innovator of contemporary display concepts and currently operates more than 260 airport programs across the globe; mall displays; wallscapes; and spectaculars including Spectacolor, a market leader in spectacular sign displays, with displays located in New York’s Times Square. The Company has been a leader in the development and operation of digital displays and networks across many of its U.S. markets.

* International Outdoor Advertising operates across Asia, Australia and Europe with displays across nearly 30 countries. The International business consists of street furniture and transit displays, billboards, mall displays, wallscapes and spectaculars. Clear Channel International’s street furniture division operates over 3,500 municipal advertising contracts worldwide.

Pittman will also remain a member of Pilot Group, LLC, a New York-based private investment firm.

“On behalf of the Board of Directors, I want to express how delighted I am that Bob has accepted this position,” said Mark Mays, Chairman of Clear Channel Media Holdings. “He has been an invaluable contributor to Clear Channel Radio since last November, and he is the perfect person to take Clear Channel to the next level. I look forward to his leadership of our company.”

“Bob Pittman brings a long history as a brilliant innovator and brand builder — from his days as a very successful radio programmer, creator of MTV and CEO of MTV Networks to his work helping to drive the phenomenal growth of AOL and his successful investments in other digital, media and technology companies. He has already generated a renewed sense of confidence and direction not only at Clear Channel, but across the entire radio and media landscape,” said Scott Sperling, Co-President of THL Partners.

“I’m thrilled we were able recruit Bob into the CEO role at Clear Channel. He is the perfect fit to lead this incredibly powerful media platform. He embraces creativity, and has given employees the motivation and freedom to innovate, take risks and succeed,” said John Connaughton, Managing Director of Bain Capital. “He thinks big, is not afraid of change and is intensely focused on driving new businesses, expanding our creative talent and maximizing the full value of Clear Channel’s extraordinary assets, ideas and people.”

Pittman’s appointment comes on the heels of several industry-leading achievements by Clear Channel Radio this past year. In March, the company acquired digital music company Thumbplay for its state-of-the-art technologies as well as its technology and product teams. Last week, Clear Channel hosted the iHeartRadio Music Festival, the largest live concert event in radio history, which marked the official launch of the New iHeartRadio, which combines more than 850 of the nation’s most popular live broadcast and digital-only radio stations from 150 cities with user-created Custom Stations. iHeartRadio was one of the few highlighted new products at Facebook’s f8 conference on September 22nd, where it was recognized for its technology and cutting-edge social integration.

Additionally, Clear Channel has demonstrated its unique national promotional capabilities through significant relationships with record labels and social media leaders, and forging relationships with partners like Microsoft, Facebook, Zynga, Toyota and HP that reach further and deeper than advertising.

“Over the past year, I’ve had the unique opportunity to look at the Clear Channel people and assets up close and have found myself increasingly drawn to the company, to the point where the chance to get even more deeply involved has just become irresistible,” said Pittman. “I know first-hand that we have great people and the assets that allow them to do great things. We are so much more than just transmitters and broadcast towers — we leverage our local brands, personalities, strategic relationships and programming expertise to create unique experiences that forge real connections with consumers across our multiple platforms.”

Pittman continued, “I look forward to continuing to work closely with John Hogan and the Clear Channel Radio team to grow our company as we strengthen relationships with our consumers, advertisers, artists, labels and partners, nationally and locally — and I’m excited by the opportunity to work with Ron Cooper and William Eccleshare to help them make the most of our outdoor advertising potential by tapping into Clear Channel’s assets as a whole. I believe we have the technologies, the physical infrastructure, the content and, most importantly, the people to market to consumers better than any other media company in the world.”

Over the summer, Spotify finally opened for business in the U.S. and included a free, ad-supported option in its offerings. Now both MOG and Rdio, two other subscription music services, are adding big free components themselves.

Tomorrow MOG is rolling out a Web-based, ad-supported version of the service that gives users an undisclosed amount of free streaming music, which they can keep listening to if they engage with the service in certain ways, like sharing playlists with friends.

And soon Rdio will offering something similar, with two differences: Its free version will be ad-free, and the company won’t prompt users to take certain actions to keep the free going. It will decide, out of the user’s sight, how long to extend the free trial period, with the intent of getting them to upgrade to a $10 monthly subscription.

The timing of the new free services aren’t accidental. They’re both being announced in advance of Facebook’s F8 developer conference next Thursday. That’s when the social network is expected to announce a new music service that will incorporate MOG and Rdio as well as Spotify.

Details about Facebook’s service are still sketchy, but the primary gist is that Facebook won’t be building its own music service. Instead it will work as a hub that allows existing services’ users to share their tunes with their friends.

But it’s very unlikely you’ll be able to listen to a friend’s Spotify song unless you’re a Spotify user yourself. So it’s crucial for the services to make sure that signing up to use them is as easy as possible. And requiring someone to pay to listen to a friend’s song seems like a non-starter.

Hence: Lots of free trials that last for an undefined period.

Rdio CEO Drew Larner won’t comment about Facebook and its upcoming service. But he will talk about the strategy of offering free music, but only for a limited time. “We know free is powerful, it’s a great way to increase your funnel,” he says. “But it’s about not creating a tier for an alternative or replacement for what would be a paying subscriber.”

Ultimately Rdio, MOG and Spotify, along with services like Rhapsody, are all trying to get to the same place. They want customers to pay them a $10 monthly fee for unlimited music that works on both the web and devices like Apple’s iPhone and Google’s Android.

That’s a model the music industry was never happy about until recently, in large part because free ad-supported services like iMeem, MySpace Music, Qtrax, and Spiralfrog sputtered and/or failed completely.

The other option for music fans who don’t want to pay for music but don’t want to break the law is to play with Web radio services like Pandora and Clear Channel’s new iheartradio.

Those services let you listen to unlimited music, for free, but don’t give you on-demand access. Instead, you need to let them program your music for you in some capacity.

Somewhere in between the two sits Turntable.fm, which is also free, but gives users more control of their music — for now, at least, while the company tries to hammer out label deals. The service is also expected to play a role in the F8 announcement next week.

Nothing new there: Everyone is raising money–lots of money–for digital music services. Again. Even though the industry’s track record for the last decade has ranged from uninspired to lousy.

Still: Pandora is trying to raise $100 million or more via IPO, and Spotify is getting another $100 million or more from DST, Kleiner Perkins and others. Then there’s Rdio, and Beyond Oblivion, and SoundCloud, etc.

The big rap on subscription streaming services like MOG, Rdio, Rhapsody and Spotify is two-fold: Royalty fees from the music owners are too high, and consumer demand is too low–if people do want to spend money on digital music, they do it on a track-by-track basis at Apple’s iTunes store, not by signing up for a $10-a-month commitment.

But MOG founder David Hyman, like many of his peers, says that things have finally changed: He says he has worked out label deals that let him make money, and that new technology–he’s particularly excited about getting streaming Web music into cars–makes subscriptions appealing to mainstream consumers.

“Music is all about portability, and it was never going to take off until smartphones and 3G,” he said. “[Without that] it was like having a book, and being told you couldn’t read it outside of a library.”

Investors who’ve seen MOG’s pitch tell me the company is projecting $14 million in revenue for next year, which seems like a very, very long stretch: Industry scuttlebutt places MOG’s total subscriber base in the 20,000 range, which is where Thumbplay was before it gave up and sold to Clear Channel earlier this year.

Hyman won’t comment on the $14 million projection or subscriber numbers, but he does point out that MOG has a second business, selling advertising for a network of music blogs. He says he’s working with 1,500 properties, which collectively attract 39 million uniques a month.

If that sounds familiar, it’s because Harrison was already supposed to have left Clear Channel at the end of 2010. Last August, Clear Channel Radio CEO John Hogan told employees, via an internal memo, that Harrison had “shared his desire to pursue new challenges,” and was going to leave at the end of the year.

But there was always some weird cloudiness about that announcement, and Harrison, who had overseen music at AOL prior to joining Clear Channel in 2004, has stayed on a bit longer. Now he really is going, Hogan says, at the end of this month. It’s worth noting that investor Bob Pittman joined Clear Channel as its “chairman of media and entertainment platforms”, focused on digital opportunities, in November.

Earlier this month, Pittman purchased music subscription service Thumbplay, which he plans to use to power Clear Channel’s Web radio stations, which are competing with Pandora.

Here’s Hogan’s second memo announcing Harrison’s departure, distributed internally today:

Good morning, all:

In the aftermath of the Thumbplay announcement, as we prepare to take iHeartRadio to the next level and extend our leadership and vision in the digital space, I wanted to let you know that Evan Harrison, one of the architects of these successes, will be leaving Clear Channel Radio at the end of March.

Since joining our company as leader of Clear Channel Radio Digital, Evan has played a critical role in CCR’s multi-platform strategy. In iHeartRadio, he built a terrific product, one that leads the industry and forms the strong foundation of all CCR’s digital efforts, as well as a great team. Today, Clear Channel has $100 million in digital revenue, 25 million monthly unique visits to our online sites and 24 million downloads of our mobile apps. All of these accomplishments are a tribute to his leadership and skill, and we thank him most sincerely for all he has done.

While there were a number of opportunities for Evan to remain with us, he feels that there are other options he is interested in pursuing and that this is the right time to explore them. We wish him all the best. Moving forward, Bob will continue in his role overseeing the CCRD team.

Please join me in thanking Evan for the significant contributions he has made to advancing the mission of Clear Channel Radio: To successfully leverage all of Clear Channel’s powerful local brands and personalities, and enable our hundreds of millions of listeners to find the music and features they want on any platform they use.

Regards,

John Hogan

Think again.

New York-based Group Commerce, which is coming out of stealth today, has the funding and the pedigree to be a viable contender.

Founded by former Google and DoubleClick executives David Rosenblatt, Jonty Kelt, and Andrew Glenn, has raised $8 million in capital.

Investors include: Spark Capital, Carmel Ventures, Lerer Media Ventures, and Bob Pittman, the founder of MTV Networks and now chairman of media and entertainment platforms at Clear Channel.

What’s more, it is coming out of the gate running with four major publishers added to its platform: DailyCandy, Meredith Corporation, Thrillist and The New York Times.

In an exclusive interview with eMoney, Rosenblatt and Kelt explain that unlike Groupon or LivingSocial, Group Commerce is not building its own consumer brand, and won’t be targeting deals directly at consumers. Rather, it’s banking on building a platform that other media companies can leverage.

Rosenblatt, who was the former CEO of DoubleClick, is the company’s chairman, Kelt is CEO, and Glenn is the company’s CTO. All three were at DoubleClick when it was acquired by Google for $3.1 billion

Ironically, they are now building a business that Google desperately wants to get into, but failed after an unsuccessful $6 billion bid to acquire Groupon.

Rosenblatt said:

“Of course, this is going to be a very big market, and there will be many more players than just two. Each participant will have a different approach. Google clearly has one, but we believe collectively that publishers have the strongest advantage. They have the audience and the brand loyalty, but they are missing the mechanics and industry expertise.”

The daily deals space is getting exceedingly crowded.

The market is expected to soar to as much as $3.9 billion in the next four years, and there’s roughly 200 players in the space, according to estimates by BIA/Kelsey.

Rosenblatt compared the market to the early days of online advertising when AOL and Yahoo dominated.

“In the early days of the display market, a big share of the market was dominated by two players, but overtime advertising was redistributed to where the audience was. Groupon and LivingSocial have done a great job creating a market, and they will continue to be very large, but there will be a similar redistribution in favor of publishers,” he said.

Beyond Groupon and LivingSocial, which are considered the market leaders, there’s other companies attacking several niches, ranging from furniture to baby apparel, travel and families. There’s also companies that say they offer exactly what Group Commerce is describing–a white label solution for publishers–including Seattle-based Tippr and ReachLocal, which recently acquired DealOn.

“There’s a huge number of Groupon clones,” Rosenblatt said. “The insight here is that none of those clones have established publishers, they don’t have brands or trusted relationships, or customer lists….We don’t have a b2c business, but that is the case with most of the other white label providers. They also don’t have teams and our breadth of services.”

He says the three components that you must have in order to be successful in the space are: A loyal audience; great content and deals; and a technology platform.

“The publishers we’ve worked with for many years [at DoubleClick] are in the process of transitioning to a new digital economy,” Rosenblatt said. “They have an audience and the ability to match the audience to deals that are contextually relevant. Our role is to offer the third part.”

Group Commerce is not just offering a technology platform, but also is sourcing the deals for its media partners, and finding a large audience and wide range of demographics for the merchants across publications.

Daily deals typically offer discounts at restaurants or other services for as much as 50 to 70 percent off. The customer pays for the voucher up front and then redeems it later. Typically, the merchant only gets half of that cash, while the other half goes to Groupon or another provider. For the merchant it’s a new form of advertising, replacing traditional methods, like Yellow Pages or newspaper ads.

Group Commerce would not disclose its revenue splits, but said it is paid with a portion of gross revenue of each deal, and that it’s a shared risk model. “If the deals don’t work, we don’t get paid,” Kelt said.

Kelt added that they believe their model will work because it combines the publisher’s knowledge of the audience with the merchants. For instance, DailyCandy’s audience is young and female, and a reader may be interested in an offer for a ladies night out at an upscale restaurant.

Although a potential customer does not have necessarily have to be a publisher, Kelt notes. It can be anyone with an audience, including a celebrity with a large following on Twitter.

Today, Group Commerce has 35 employees in New York, Chicago, Florida, San Francisco and Los Angeles. It’s planning to grow to 100 employees by the end of the year with the majority being sales people.

Thumbplay will hang on to its once-booming ringtone business, but only temporarily; it intends to sell that off in a separate deal.

Terms of the Clear Channel deal weren’t disclosed, but a source familiar with the company tells me investors who put some $41 million into the company don’t expect to get all their money back. PaidContent reported earlier today that a sale was in progress.

I’m told that Clear Channel will be buying a business that only managed to sign up 20,000 subscribers, who pay $10 a month for unlimited music, since March 2010.

But the radio company seems more interested for now in using Thumbplay’s technology and team to build out its existing, free Web radio service. That is, it is competing with Pandora, more than Rhapsody, Rdio and Spotify.

“This is step one,” says Bob Pittman, the investor who put his own money into Clear Channel and came aboard as its “chairman of media and entertainment platforms” last fall. “Three percent of all radio listened to is digital, and it is early still. We need to get ahead of the curve and not behind it.”

Pittman says Thumbplay’s technology will be integrated in the coming months into Clear Channel’s “iheartradio” service, which offers 750 free Web radio stations and boasts 25 million monthly uniques. He says all 65 Thumbplay employees working on music services will get jobs at Clear Channel.

Clear Channel will get into subscriptions “eventually”, Pittman says. Clear Channel says  existing Thumbplay subscribers won’t notice any change, but that the company will stop marketing for new customers.

Thumbplay is both a cautionary tale for investors pouring money yet again into digital music, and for the perils of pivoting in the wrong direction.

Just a few years ago, Thumbplay was doing more than $100 million a year selling ringtones, with about a million subscribers paying $10 a month for the digital novelties. But its management team could see that the business was on its way out, and used revenues from ringtones to fund a foray into subscription music.

But Thumbplay ran into the same problem that every other music subscription has faced so far: Lousy record label economics, and a lack of consumer demand.

Things were supposed to improve once subscriptions services started working on Apple’s iPod and iPhone platform, and they have — they also work on Google’s Android, Research in Motion’s BlackBerry, etc — but it’s still a niche industry, with perhaps a million subscribers in the U.S.

Spotify, the music industry’s, next big hope, boasts about 1 million subscribers for its European service. But it’s been able to lure them by offering unlimited music for free on their PCs, then upselling users into a service that also works on the phones.

Subscription services in the U.S. have traditionally only offered three days of free music to trial users, and the amount of free music that Spotify offers has been a sticking point as it tries to launch in the States.

So you can see why Pittman and company would be targeting free Web radio before trying out subscriptions themselves. That business has big music fees, too, but they’re more manageable, and with enough scale it might be possible to turn a profit.

Pandora, which has filed to raised $100 million in a public offering, lost $330,000 on revenues of $90 million in the first 9 months of last year. And Pittman seems confident that Clear Channel, with its network of 850 terrestrial radio stations — and crucially, an established salesforce – can do much better than that.

“We already have 25 million monthly uniques and we think we can use those to compete with Pandora,” he says. “Pandora is a great feature rather than a business. And we want to have all these features and add to the service continually.”

This should change early next year, but in the most limited way. Hulu plans to let users in the U.K., and most likely, other countries, access its U.S. site to watch a single show: The made-for-the Web reality series, “If I Can Dream.”

The show comes via 19 Entertainment, owner and creator of the “American Idol” franchise, and has a similar theme: It will follow five would-be stars as they try to make their way as actors, singers, etc. They’ll live in a Hollywood house wired with HD cameras and microphones, and viewers will be able to follow them live, seven days a week, via a streaming Web video site.

That footage will be edited down to a 30-minute weekly highlights show for Hulu. And that’s the show that should provide many international viewers with their first glimpse of Hulu, owned by GE’s (GE) NBC, News Corp.’s (NWS) Fox and Disney’s (DIS) ABC.

The press release announcing “If I Can Dream” says “it will be the first recurring show to be available to select international audiences via Hulu,” though it doesn’t spell out which countries or a time frame. But I’m told the series is set to start running early next year and that the U.K., where 19 Entertainment is based, is one of the countries slated to get access.

There’s still a possibility that the international plans could fall through. However, 19 Entertainment owns the show outright, which ought to make things easy. And both Ford (F) and Pepsi (PEP), which have already signed on to underwrite much of the show’s costs, advertise internationally, which ought to make things even easier.

But since “If I Can Dream” will use recorded music as a soundtrack, clearing the rights to every song in every territory could pose a problem.

That uncertainty should also help explain why Hulu has taken so long to expand the rest of the site to other countries: Even when Hulu finds major TV partners that want to work with it–which isn’t always a given–sorting out rights problems for every show or movie can be a lot of work.

Meanwhile, a few notes on “If I Can Dream”:

• Hulu and 19 Entertainment, which is owned by Bob Sillerman’s CKX (CKXE) licensing shop, don’t seem exactly sure how to describe the new venture. Hulu’s press release calls it a “post-reality entertainment show.” But 19 Entertainment’s PR guy asked me specifically to avoid calling it a reality show. “It’s a Web experience,” he explains. Okay, then.
• Whatever you want to call it, at least parts of “If I Can Dream” will seem familiar: There’s the Peeping Tom component of “Big Brother,” mixed with “Idol’s” star-making. And if we’re lucky, some drunken debauchery a la “The Real World.”
• The most interesting element is the show’s path to Hulu: 19 Entertainment originally pitched the show to broadcast and cable networks, which hemmed and hawed, I’m told. But sources say Hulu jumped at the chance to run the show as an exclusive. Theoretically, if it does well enough on the Web, it could end up on conventional TV next year, too. But “If I Can Dream” is designed to turn a profit without leaving the Internet.
• The show is synergized from the get-go: In addition to the Ford, Pepsi and Hulu connections, it will also use promotion from News Corp.’s MySpace, which will help run a talent search to find new faces as the old ones cycle out. And Clear Channel (CCO) will use its network of radio stations to promote the talent.
• The cast of five seems to be composed of exceptionally good-looking people. If you’re trying to view this clip from outside the U.S., you’ll have to take my word for it:

Sources say Time Warner is likely to promote Mark D’Arcy, Partilla’s second in command, to fill his post, which reports into CEO Jeff Bewkes. The company is in the midst of corporate slimdown — it has already spun off its cable business, plans to do the same with AOL, and may end up (finally) doing the same thing with its Time Inc. publishing unit. Here’s the release announcing Partilla’s move:

Clear Channel Names Advertising & Marketing Veteran John Partilla as Corporate EVP and?President, Global Media Sales

Partilla to Lead National Business Development Across?Radio and Outdoor in Newly Created Position

SAN ANTONIO – June 8, 2009 – Clear Channel Communications, Inc. today named John Partilla, 44, to the newly created position of Executive Vice President and President of Global Media Sales. Partilla will lead national business development across the company’s radio and outdoor businesses, reporting to CEO Mark Mays.

“We’ve driven a tremendous increase in the value of our radio and outdoor platforms to national brands over the past five years and now is the time to accelerate and expand our attention to chief marketing officers and brand managers,” said Mays. “John is widely respected as a creative and ‘intrepreneurial’ leader with a deep understanding of client needs. His success in crafting differentiated solutions makes him the ideal strategic sales executive for us at this important time.”

Major brands including Disney, Verizon, Kellog’s and others already engage directly with the company on cross-platform and multi-property ad buys.

Partilla joins Clear Channel from Time Warner, where he lead Time Warner’s Global Media Group in its mission to work with major advertisers and help drive the growth of advertising and marketing revenue across all of Time Warner’s businesses. Prior to overseeing Global Media at Time Warner, John was President at Young & Rubicam, and founder and Chief Executive Officer of Brand Buzz. Launched in 2000, Brand Buzz is an “agency within an agency” at Young & Rubicam designed to provide solutions for smaller advertisers. Partilla spent eighteen years at Young & Rubicam and in that time amassed an extensive roster of strategic sales and brand development experience, having worked across many of the agency’s core accounts.

“We’re entering a new era for advertising and marketing, and the strides that Clear Channel has made in digital platforms across both the radio and outdoor businesses are an outstanding match for the new demands being placed on marketers,” said Partilla. “Realizing that potential will require adding strategic and creative value for our best advertising partners – helping them solve their most critical business problems. The result will be more revenue across all of Clear Channel’s businesses. I’m incredibly excited to begin this new chapter with Clear Channel.”

Partilla, who will be based in New York, holds an MBA from Columbia University and a B.A. in Business Administration from University of Delaware.

Just like everyone else who racked up lots of loans when the banks were giving cash with almost no strings attached, big media have a debt hangover. Clear Channel, whose private equity owners took on $17 billion in debt to acquire it last year, is getting hammered by investors who think it won’t be able to pay that money back.

Next up for scrutiny: CBS, which has a big debt payment due next year and not that much cash on hand.

The Wall Street Journal outlines Clear Channel’s situation: The company’s debt is trading at pennies on the dollar because investors worry that its radio and billboard businesses won’t generate enough cash to satisfy certain loan covenants, which would then jack up the rates on the existing debt. The company tapped a credit line on Monday, but that’s not making anyone feel more comfortable:

Drawing down the remaining $1.6 billion in its $2 billion credit facility injects more cash into the struggling company’s balance sheet, but the move has analysts wondering whether Clear Channel may be choosing to access those funds now for fear it won’t be able to later. If the company trips certain financial covenants–conditions a company must meet to satisfy lenders–it may not be able to tap that credit, analysts say…

If the debt ratio worsens rapidly over the next few quarters, eventually hitting 9.5 or more, debt holders have the right to ask for higher interest payments or other fees from the company. They also could demand their funds back immediately, potentially sending the company into bankruptcy proceedings.”

No one is mentioning the B word in connection with CBS (CBS). But Barclays analyst Scott Shiffman, in a note published last week, does make ominous sounds (title of his report: “CBS–The Slippery Slope Has Begun”).

The gist: CBS has a $1.6 billion bond that matures next year, and about $500 million cash on hand. In order to make that payment, the broadcaster has several unappealing choices, including cutting its dividend or drawing down a revolver loan.

Any of those options, Shiffman argues, in conjunction with a weakened TV business, could prompt the newly vigilant credit rating agencies to downgrade CBS’s debt below investment grade–i.e., junk. S&P may be the first to make a call, perhaps by the end of the month, he says.

No comment from CBS. But the company does report earnings next week; expect to hear lots about this from Les Moonves and company during the Feb. 18 conference call.

By the way: I’d like to show you the CBS News interview of the month–not Katie Couric’s “60 Minutes” interview with Hudson hero pilot Chesley Sullenberger, but her pre-Grammy chat with Lil Wayne. Which included Couric’s instant classic line “You also, reportedly, like…like your weed.”

Alas, CBS has yanked all the usable versions off of YouTube and isn’t showing them anywhere on its vaunted CBS Audience Network. What gives Quincy?

Fortunately, Gawker Media’s Jezebel taped the thing, so you can head over here to watch it, as some 19,000 other people have. Well worth a couple minutes.

UPDATE: CBS Interactive head Quincy Smith graciously points out that his network does indeed have a short clip of Lil Wayne interview, and says that licensing issues prevent the network from letting us see the whole thing. But still–surely, there was some way to include the weed line in the excerpt! That’s the best part!

Here’s what they’ve got:

Watch CBS Videos Online

In addition to myriad rock star perks you’ve already heard about, here’s another one to add to the list: Better stock deals. At least when you’re talking about stock in concert promoter Live Nation.

The company spun off from the radio and billboard giant Clear Channel a couple years ago and has been trying to lock up big name artists to exclusive deals by shoveling tons of loot their way. Madonna, U2, Jay-Z and others have gladly accepted pacts that pay them hundreds of millions of dollars to work exclusively with the company.

Some of those payments have been in stock, which is supposed to indicate that the company and the music acts are all in the same boat. And since Live Nation (LYV) shares have gotten pummeled, you’d think those music acts would be hurting too. Nope.

The Wall Street Journal:

Live Nation had guaranteed that U2 would receive $25 million for 1.6 million shares. But the current market value was just $6.1 million at the close of trading Wednesday. That leaves Live Nation on the hook for the balance, which the company said Wednesday in a SEC filing it would pay with cash on hand or borrowed money.

There could be more bad news coming from another of the company’s marquee acts: Madonna. In April, Madonna is eligible to sell $25 million of stock under the terms of her contract, even though the stock’s market value has plunged 83 percent since she struck her deal in October 2007.”

That’s lousy news for Live Nation shareholders. U2′s cash-out put even more pressure on the stock (the company is selling 1.56 million shares of its own to help pay for U2′s deal), and news of the Madonna deal will do the same.

The bigger question is whether Live Nation’s strategy ever made sense: It was supposed to use the big name acts to help it expand beyond the concert business and into other revenue streams… like selling CDs. Understandable why the company wanted to diversify beyond concerts, which are high-risk, low-margin affairs. But signing big acts to big, guaranteed contracts is one of the things that got the music business in the trouble it’s in now.

But let’s give the old music industry some credit: It did bring us some pretty good music. Here’s U2, circa 1983: