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April 10, 2005

AOL and XM Satellite to set up online radio service

American Online, Time Warner's interactive services division, is reported to be teaming up with Washington-based company XM Satellite Radio Holdings to launch a new internet-based radio service.

By CBR Staff Writer

The program will replace XM’s existing paid web site service and America Online’s (AOL) current radio services, Radio and Netscape Radio, in what has been seen as an effort to expand the radio user base and increase internet traffic at AOL’s site.

According to the companies, the new service will feature 70 XM channels and 130 AOL channels that will be streamed over the web at a monthly fee.

AOL said it also aims to provide a limited version of the service on its web site this summer, which according to the firm will carry 20 XM channels in addition to its own 130 channels. Half of these XM channels will remain constant while the other half will rotate.

It is thought the new service will be offered for free to AOL subscribers but will cost $5 a month for outside users. Subscribers to XM Radio will only be able to retrieve that company’s online stations

AOL hopes the deal will help bolster its popularity by offering an incentive to existing and defecting customers to stay. The predicted scope of programming may provide the company with heavier armor to compete against other cable and phone companies that promise high speed internet connections. It will also enable AOL to enter the battlefield with larger online radio services such as Yahoo! and Microsoft’s MSN Radio.

For XM, the agreement is being touted as an opportunity to increase its exposure among AOL subscribers.

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