• by Gavin O'Malley  @mp_gavin, April 12, 2005

Further blurring the lines between competing content channels, America Online and XM Satellite Radio Monday announced plans to launch a Web-based radio service this summer. The co-branded service, as yet unnamed, will be integrated into AOL's free next-generation AOL.com Web portal. Terms of the deal were not disclosed.

On AOL.com, AOL will make 130 of its radio stations and 20 XM stations available for unlimited listening Web-wide at no cost.

An enhanced subscription version of the service will feature 70 XM stations and over 130 AOL Radio original and third-party stations. Bill Wilson, senior vice president of programming at AOL, said a price has not been set for the premium service, but guessed it would cost about $5 a month. AOL's 22 million subscribers will receive the service for free.

AOL partnered with XM because of its popularity within the satellite radio space, said Wilson. "We see them as an established partner with whom we can work to develop this hot market," he said.

XM plans to replace its current Web radio offering, which recently became free to subscribers, with the AOL-powered service.

Ads of 15-30 seconds typically run twice an hour on the AOL Radio Network, and Wilson said AOL had no plans to change that standard. The new AOL station will also support banner advertising, while XM channels will remain ad-free.

As part of the agreement, AOL and XM said they plan to work together to create new programming, and to co-promote their new service across their networks to XM's 3.8 million subscribers and to AOL's 100 million visitors across its various networks.

Yahoo!'s online radio service LAUNCHcast drew slightly more U.S. listeners than the AOL Radio Network--2,074,400 to 1,995,700--during an average week in January, according to a recent report by comScore Media Metrix and Arbitron. Microsoft's MSN Radio and WindowsMedia.com together drew 473,000 listeners per week, while Web radio community Live365 attracted 438,000 listeners per week in January.