Project Playlist is looking for funding and one of the companies the music service spoke to about investing was AOL, multiple sources told CNET.
Whether or not those talks with AOL yielded anything is unclear, but music industry sources said AOL kicked the tires.
"Unfortunately we cannot offer any comments about any potential fund-raising. If we have any news to announce in the near future I will let you know," said Jeremy Riney, Project Playlist's founder, in an e-mail.
An AOL spokeswoman said that the company doesn't comment on rumors and speculation.
Project Playlist, which can be found at Playlist.com, enables users to create and share music playlists with friends. A couple of years ago, the service had built a reputation as a potential challenger to some of the other ad-supported music services, such as MySpace Music and Imeem. But last we left the privately held company, it was coming off an embarrassing management shakeup when then CEO Owen Van Natta, the former Facebook exec, resigned after only five months on the job to become MySpace CEO.
A dark cloud of litigation also hung over the company after two of the four major recording companies filed a copyright suit against the site.
Since then, Project Playlist hired John Sykes, the longtime MTV Networks executive, to replace Van Natta. But the lawsuit is still pending and the company has been successful at licensing music from only two of the four major labels: Sony Music Entertainment and EMI Music.
So, it appears that Project Playlist is in need of cash and AOL may be interested in spicing up its ho-hum music offering.
Right now, AOL Music offers mostly independent music, Web radio, and song lyrics. It does not offer any material from the top four recording companies. One sign the Web portal may be preparing to boost its content offering is the hiring of David Eun, Google's former chief of content partnerships.
Eun was well respected with many music and film companies, sources said, and was credited with helping YouTube to expand it's many licensing agreements with the top labels and Hollywood film studios.
Correction, 3:45 p.m. PT: An earlier version of this story included an incorrect spelling of Project Playlist founder Jeremy Riney's name.