AOL, XM Join for Online Radio Service

America Online and XM Satellite Radio have forged a partnership to create a new Web-based radio service that will replace both companies' current online offerings. The co-branded service will be free to all Web users, with a premium counterpart that includes more stations for a small monthly fee.

Following its new open portal strategy of exposing its content and services to consumers outside its "walled garden" of subscribers, AOL will make 130 of its radio stations and 20 XM stations available for unlimited listening at no cost.

An enhanced high-bandwidth version of the service will feature 70 XM stations for around $5 USD per month, although specific pricing has not yet been set. XM plans to replace its current Web radio offering, which became free to subscribers last week, with the AOL-powered service when it launches.

AOL members will receive access to the premium service free of charge.

The task of building the radio service will be in the hands of AOL, which is likely to use its Radio@AOL infrastructure based upon Ultravox and the AACPlus streaming audio format.

AOL says it expects to begin rolling out the service with XM this summer, alongside a new AOL.com portal. Although a name has not yet been decided upon, both companies have pledged to heavily promote the service among their respective audiences and jointly develop radio content.

As part of the deal, XM will integrate original AOL programming such as AOL Music Sessions into its satellite radio channels, and AOL will promote XM programs across its Web properties.

Marketing was one of the driving forces behind the XM deal, according to sources, and advertising will play a key role. Commercials will be integrated into AOL stations, although XM channels will remain ad-free.

AOL says that "digital is the future of radio" and the partnership brings together its online radio presence with a rapidly expanding satellite audience.

"This relationship creates important and valuable opportunities across our core businesses enabling us to provide unique value for our large Web audience, enhanced programming for our existing and new AOL members, and the ability to introduce new premium services," said America Online CEO Jonathan Miller in the announcement.

AOL currently boasts 10 million online radio listeners each month while XM subscribers number nearly 3.8 million.

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