Friday, March 07, 2008

AOL, CBS Radio team up

XM ends partnership with AOL, launches new online radio initiative

CBS Radio and AOL struck a major deal Friday, which allows AOL to stream all CBS-owned radio stations on its Internet Radio service. The deal will mesh CBS-owned radio stations with AOL's existing radio stations, and it also calls for CBS to create custom radio stations exclusively for the Internet.

CBS is also developing a new player for AOL listeners, which will enable listeners to toggle between stations, rate songs, buy albums, link to artists' web sites, and even purchase concert tickets.

AOL will have access to Chicago's terrestrial CBS radio stations, including sports talk WSCR-AM (The Score), Triple A-formatted WXRT-FM, rhythmic/hip-hop outlet WBBM-FM (B96) and new AC station WCFS-FM (Fresh 105.9)

Other stations available to AOL listeners include legendary Oldies station WCBS-FM in New York, alternative rocker KROQ-FM in Los Angeles, and urban-formatted WVEE-FM in Atlanta, plus several JACK radio stations, including WJMK-FM in Chicago.

CBS will sell adtime for the online stations using CBS TargetSpot, with commercials differing from their terrestrial counterparts.

Read the official press release from CBS Radio

What about XM?

As a result of the CBS deal, XM has opted out of its contract with AOL, effective May 1. On that date, XM channels will no longer be available on AOL's website. Instead, XM has decided to re-launch its own online radio service, named XM Radio Online.

XM will stream 80 channels of commercial-free music, along with exclusive content from Bob Dylan, Oprah Winfrey, and Opie & Anthony.

Customers who sign up for the internet service get a fourteen-day free trial and afterward, pay just $2.99 a month for the first six months.

Analysis: Trading in commercial-free XM channels for Eddie & Jobo? What a bum deal! (it's worst enough I have to see the two old geezers in those insurance commercials on TV.) While it seems like a huge victory for terrestrial radio, it actually may help Internet Radio. AOL's deal with the enemy (CBS Radio) is better for them than one with XM, given one company is obviously in better financial shape than the other. XM is in the process of merging with Sirius, and the future of both (and satellite radio in general) is quite unclear. It's still not known whether or not the FCC will approve the deal.

One could wonder however, what the CBS/AOL deal means for RIAA and Sound Exchange, which has been seeking bigger royalties from Internet streamers. They could go after the two for a even bigger payday.

Also, are AOL's XM Internet listeners - many of them who left terrestrial radio for the greener pasture of commercial-free stations - stick around? With plenty of choices on the Internet - including lots of commercial-free stations, many of them (like me) will likely leave AOL. But those listeners will be replaced by a lot of CBS Radio ones, many of them are quite loyal to their outlets (with WXRT as an example.)

CBS is willing to bet the farm on Internet radio with AOL. It's a bet worth taking.

Rant: You think I was going to let this deal go without criticizing it a little? As for yours truly - is he ticked that XM decided to move its Internet channels to a pay platform, knowing damn well you can get other Internet stations without commercials for free? Is he ticked AOL sold out to CBS Radio, a group known for its cookie-cutter formats and annoying radio personalities? Is he ticked that AOL is moving to an advertising-supported format? You bet. Thank goodness for those other choices. Have fun with your new best friends Eddie & Jobo, AOL.

The business side of me says this is a good deal. The Internet radio fan side of me says this deal completely blows. Now I know what a person who eats Frosted Mini-Wheats for breakfast feels like.

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