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Online Exclusive: Interactive News

XM SATELLITE RADIO AND AOL ANNOUNCE PARTNERSHIP

Will Cross-Promote Brands and Audio Content

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NEW YORK (AdAge.com) -- In a move that is further proof of the Internet's rapidly expanding role in the radio business, XM Satellite Radio and America Online's streaming AOL Radio service have announced a partnership.
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AOL Radio is the Web's second most popular online radio site after Yahoo’s Launchcast, drawing a cumulative audience of nearly 2 million listeners a week, according to Arbitron and comScore Media Metrix, which introduced an Internet radio measuring service in January.

Competitor Clear Channel
The XM-AOL deal comes on the heels of an announcement by radio giant Clear Channel that it will expand and enhance its own online operations with video streams of live music performances and a national streaming platform for its various stations.

Under the agreement announced yesterday, both XM and AOL will cross-promote their assets but XM is likely to reap the most brand value out of the new arrangement. While XM has 3.8 million subscribers, AOL has 23 million members and monthly traffic statistics measured in the hundreds of millions. “It’s an inexpensive means for [XM] to improve overall brand awareness,” said Maurice McKenzie, an analyst at Friedman, Billings, Ramsey & Co.

In the announcement, XM's CEO, Hugh Panero, cited three important categories for the future success of XM: retail, automotive and online. As the first satellite radio provider to partner with an Internet radio player, XM is mirroring the head start it got in the auto manufacturing world. Industry observers expect rival Sirius Satellite Radio to soon follow with its own online partnership.

Sirius countermove expected
“Sirius doesn’t have an alliance, though it allows potential subscribers to sample the service online,” Mr. McKenzie said. “I would expect Sirius to raise awareness of its own product either on a stand-alone basis or by looking for a mutually beneficial partnership.”

XM said the agreement involves the creation of two co-branded AOL Radio tiers of service. The first features a free sampling of 20 XM stations and 130 AOL Radio stations. The second, which is free to AOL members and available to nonmembers with a monthly subscription, features 70 XM stations and 130 AOL stations as well as third-party stations. Meanwhile, XM will feature select AOL original radio programs on its satellite service.

XM didn’t clarify specifics of the deal, such as whether it is allowed to partner with other Internet radio services. It also did not disclose financial details of the partnership.

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