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AOL tunes in XM for radio deal

Satellite radio expands its reach in cyberspace as market leader XM joins forces with America Online.

XM Satellite Radio isn't just for cars anymore. In a new deal with America Online, the service is finding its way into PCs.

The satellite radio company and AOL are teaming up to create an online radio service due to go into operation this summer with the launch of the new There will be both free and premium versions of the co-branded service, the companies said Monday.

As part of the transition, AOL will fold its Radio@AOL and Radio@Netscape service into the new offering. AOL will deliver the service's technology and offer its own programming, in combination with XM's stations. AOL will also sell advertisements for the narrowband version. The two companies plan to work together to develop new programs and services for both online and satellite listeners.

"This will be effectively a branding and content change," said AOL spokeswoman Ann Burkart.

The deal highlights AOL's ongoing efforts to give people a reason to subscribe to its online service. Over the past three years, the company has watched its core base of dial-up subscribers, who pay $23.90 per month, decline by more than 3 million, most of them defecting to broadband Internet services offered by cable and phone companies.

In response, AOL has tried selling a slimmed-down version for $14.95 a month that rides on top of an existing broadband connection. The Web heavyweight is also trying to attract a wider group of consumers by pushing out content and services formerly offered only to subscribers to its portal.

AOL is taking another approach to fending off defections by selling stand-alone premium services. Last week, it said it would begin offering Internet phone service in 40 cities across the country.

In the last six months, XM and rival Sirius Satellite Radio have let loose a flood of new business deals, starting with Sirius' signing of shock jock Howard Stern. Each has been furiously reaching agreements with various automakers and sports leagues.

XM is the larger of the two with about 3.8 million subscribers, compared with 1.2 million for Sirius, but need many more to start turning profits. The services each charge about $13 a month for access to dozens of audio channels.

"Our philosophy at XM has been to work with strong partners at every level: retail, automotive and now online to build awareness and subscriptions for XM," CEO Hugh Panero said in a statement.