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AOL, XM Satellite to start Web radio service

America Online announces plans to launch a Web-based radio service with XM Satellite Radio in a move that may help XM win customers from AOL’s 24 million subscribers.
/ Source: Reuters

America Online, the world’s largest online service, and XM Satellite Radio Holdings Inc.  on Monday said they would launch an online radio service offering about 200 channels, the latest move in an increasingly competitive radio market.

Beginning this summer, the service will offer 200 channels streamed over the Web in CD-quality sound for a monthly fee. It will combine existing stations from both partners, the companies said.

The premium service, which will cost an estimated $5 a month, will be available for free to AOL’s current paying subscribers. XM Radio subscribers will have access only to XM’s online stations.

The deal represents another effort by AOL, a unit of Time Warner Inc., to stem the loss in paying subscribers.

It should help XM, the leading U.S satellite radio provider with about 3.8 million subscribers, increase exposure and possibly lure more subscribers from AOL’s estimated 24 million subscribers.

Satellite radio companies, which also include XM’s smaller rival Sirius Satellite Radio, are seen as growing threats to traditional radio companies such as the No. 1 U.S. player, Clear Channel Communications Inc.

Clear Channel recently announced a wholesale restructuring of its online radio services, led by a former executive of AOL and BMG, Evan Harrison. Clear Channel’s new online radio network will include original video programming and digital services such as downloading and subscription radio services as early as this summer.

San Antonio, Texas-based Clear Channel has struggled to weather a severe downturn in the radio advertising market as it loses ad dollars to the Internet and loses listeners to satellite radio services and digital music players such as Apple Computer Inc.’s iPod.

Late last year, Clear Channel’s estimated 1,200 radio stations began cutting advertising air time and raising rates, as part of a drive to improve the quality of radio programming.

A host of companies, including Walt Disney Co., TiVo, and Microsoft Corp. are planning to use high-speed Internet connections to deliver high-quality audio video to consumers. Last week, Viacom Inc. unveiled MTV Overdrive, a Web site offering full-length music video on demand and other shows.

AOL said about 150 radio stations also will be available for free to all Web users, but these will be offered with lower quality audio.

AOL currently offers about 200 radio stations available to paying AOL subscribers. XM also currently operates approximately 70 online radio channels.

AOL will also begin offering some of its online radio shows, such as AOL Music Sessions and AOL Music LIVE!, across some of XM’s 150 satellite radio channels.

“This relationship creates important and valuable opportunities across our core businesses ... and the ability to introduce new premium services,” AOL’s Chairman and CEO Jonathan Miller said in a statement.