AOL, XM to launch online radio service

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    AOL, XM to launch online radio service
    Mon Apr 11, 2005 12:00 AM ET
    By Kenneth Li

    NEW YORK, April 11 (Reuters) - America Online, the world's largest online service, on Monday plans to announce a deal with XM Satellite Radio (XMSR.O: Quote, Profile, Research) to launch a new online radio service that will deliver about 200 radio channels.

    The service, which will offer 200 channels streamed over the Web in CD-quality sound for a monthly fee beginning this summer, will be a combination of existing stations from both partners, AOL 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 gambit by AOL, which continues to lose more paying subscribers every quarter, to convince them to stay.

    Meanwhile, it helps 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, including Sirius Satellite Radio (SIRI.O: Quote, Profile, Research) , are seen as growing threats to traditional radio companies such as top U.S. radio conglomerate Clear Channel Communications Inc. (CCU.N: Quote, Profile, Research)

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

    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, the online unit of Time Warner Inc. (TWX.N: Quote, Profile, Research) , 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.

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