AOL and XM have agreed to jointly create a radio service according to the WSJ who says the new cobranded service, which hasn’t been named yet, will replace the current paid service on XM’s Web site and will replace AOL’s current radio services — AOL Radio and Netscape Radio.
XM receives a powerful incentive in this deal as it will be able to market to over 20 million AOL users while AOL will be able to add 70 commercial free XM channels to its 130 other channels. AOL will package these stations for their subscribers and will also have a package for non-subscribers.
My take on this is that this is a win-win strategy and we will see Sirius coming back with an announcement with probably Yahoo! Or MSN. Google will also be heavily considering whether such a launch makes sense for them. In my opinion newspaper companies will get into the act soon as well. We talk about the triple play being part voice, video and data. Radio too can be part of the mix. It is all about increasing average revenue per user or ARPU and the more services you have to offer the more revenue you make.