• by Erik Sass  @eriksass1, March 2, 2011

The cloud-based music service marketplace is heating up with Clear Channel Radio's acquisition of Thumbplay, Inc., with an eye toward integrating it with Clear Channel's iHeartRadio platform. Terms of the deal were not disclosed, and the acquisition did not include Thumbplay's ringtone business.

Thumbplay allows users to listen to unlimited, on-demand music -- both on- and offline -- on their computer or mobile device, including iPhones and smartphones using the Android operating system.

The service includes an auto-sync feature for mobile devices, plus options for importing music from iTunes and an offline mode for listening on subways, planes or other situations without mobile Internet connectivity.

Clear Channel said it plans to combine Thumbplay with its existing iHeartRadio service to create a new platform, which will power digital music operations for Clear Channel's roughly 750 radio stations nationwide, as well as a number of digital, commercial-free stations hosted on iHeartRadio.

The new platform will also allow listeners to create their own personalized "radio stations" using Thumbplay's "Playlist Genie" and "Favorites" functions.

Clear Channel also said the Thumbplay acquisition will allow it to deploy a variety of subscription services across a number of digital platforms, including the Internet, automotive and mobile devices.

The news of the Thumbplay acquisition comes not long after competing digital radio services have unveiled major expansions and strategic moves to get new funding.

In early February, Pandora announced plans to go public sometime in the near future, hoping to raise about $100 million through the stock offering. Pandora's popularity has boomed, thanks in large part to the growing penetration of smartphones, with total ad revenues increasing from $55.2 million in 2009 to over $100 million in 2010. It currently claims to have around 80 million users in the U.S.