Muzak

History

Inventor George Owen Squier, credited with inventing telephone carrier multiplexing in 1910, developed the original technical basis for Muzak.{{cite book |title=George Owen Squier: U.S. Army Major General, Inventor

Squier recognized the potential for this technology to be used to deliver music to listeners without the use of radio, which at the time was in early state and required fussy and expensive equipment. Early successful tests were performed, delivering music to customers on New York's Staten Island via their electrical wires.

In 1922, the rights to Squier's patents were acquired by the North American Company utility conglomerate, which created the firm Wired Radio, Inc. to deliver music to their customers, charging them for music on their electric bill. By the 1930s radio had made great advances, and households began listening to broadcasts received via the airwaves for free, supported by advertising.

Focus on mercantile environment (1934–1950)

Squier remained involved in the project, but as the home market became eclipsed by radio in 1934 he changed the company's focus to delivering music to commercial clients.{{cite journal

In 1937, the Muzak division was purchased from the North American Company by Warner Bros.,{{cite web |title=History of Muzak, Inc. |website=FundingUniverse.com

Stimulus progression (1950–1960)

The company began customizing the pace and style of the music provided throughout the workday in an effort to maintain productivity. The music was programmed in 15-minute blocks, gradually getting faster in tempo and louder and brassier in instrumentation, to encourage workers to speed up their pace. Following the completion of a 15-minute segment, the music would fall silent for 15 minutes. This was partly done for technical reasons, but company-funded research also showed that alternating music with silence limited listener fatigue, and made the "stimulus" effect of Stimulus Progression more effective.

During this period, Muzak began recording their own "orchestra"actually a number of orchestras in studios around the country, sometimes in other countries as wellcomposed of top local studio musicians. This allowed them to control all aspects of the music for insertion into specific slots in the Stimulus Progression programs.

Muzak's popularity remained high through the mid-1960s. President Dwight D. Eisenhower was the first president to pump Muzak into the West Wing, and Lyndon B. Johnson owned the Muzak franchise in Austin, Texas. NASA reportedly used Muzak in many of its space missions to soothe astronauts and occupy periods of inactivity.

Original artist programming (1960–1980)

With the rise in youth culture and the growing influence of the baby boomer generation in the 1960s and 1970s, Muzak's popularity declined. It began losing market share to new "foreground music" companies, such as AEI Music Network Inc. and Yesco, that offered so-called "original artist music programming." Rather than using orchestral re-recordings as Muzak had for its Stimulus Progression program, they licensed original recordings, and included vocal music from a recording studio in New York. They also offered many styles, from rock and pop to Spanish-language programming (for Mexican restaurants), jazz, blues and classical, as well as the traditional "easy listening." Foreground music markets included restaurants, fashion stores, retail outlets, malls, dental offices, airlines and public spaces.

Muzak merged with Yesco on December 31, 1986, as part of their initiative to strengthen their presence in the foreground music industry. Since 1997, Muzak has used original artists for its music, except on its Environmental channel.

A small contingent of Muzak's business continued to provide their trademarked background music sound where it remained popular, particularly in Japan.

New business model

Muzak was, since the 1940s, a franchise operation, with local offices each purchasing performance licenses for subscribers to the music, delivery technology, and brand name for their geographic areas. The company (franchisor) changed hands several times, becoming a division of the Field Corporation in the mid-1980s.{{cite web |title=Muzak, Inc. – Originators of 'Elevator Music'

Through the 1980s and 1990s, Muzak moved away from the "elevator music" approach and instead began to offer multiple specialized channels of popular music. Muzak pioneered "audio architecture", a process of designing custom music playlists for specific customers.

During the transition to popular music, the Stimulus Progression format continued to be offered through the Environmental channel. Muzak shifted away from large orchestras and began recording covers with local Seattle artists, such as Lennie Moore, Donny Marrow, and John Morton. Instead of creating unique renditions, covers were arranged to sound similar to the original, with vocals being replaced by either a piano, woodwind, or guitar. In 1987, Muzak established relations with Donny Marrow of Disk Eyes Productions to produce the majority of the cover library for the Environmental channel, and to serve as their primary A&R consultant. By 1999, the Environmental channel had over 5000 tracks.

Even with the changes in format, rocker Ted Nugent used Muzak as an icon of everything "uncool" about music. In 1986, he publicly made a $10 million bid to purchase the company with the stated intent of shutting it down. "Muzak is an evil force in today's society, causing people to lapse into uncontrollable fits of blandness," Nugent said. "It's been responsible for ruining some of the best minds of our generation." His bid was refused by Muzak's then-owner, the Westinghouse Electric Corporation.

By the late 1990s, the Muzak corporation had largely rebranded itself. As of 2010, Muzak distributed 3 million commercially available original artist songs. It offered almost 100 channels of music via satellite or IP delivery, in addition to completely custom music programs tailored to their customers' needs.

According to EchoStar, one of Muzak's distribution providers, Muzak's business music service was broadcast on rented bandwidth from EchoStar VII, in geostationary orbit at 119 degrees west longitude. Other rented bandwidth included an analog service on Galaxy 3C and a digital service on SES-3.

On April 12, 2007, Muzak Holdings LLC announced to its employees that it might merge with DMX Music. This merger was approved by the Department of Justice Antitrust Division one year later. However, by April 2009, the deal appeared to have faltered.

On January 23, 2009, a spokesperson said Muzak was attempting to restructure its debt, and filing for bankruptcy was one of several options. The company had ample cash but had large amounts of debt coming due in the midst of a difficult economic climate.

Bankruptcy

On February 10, 2009, Muzak Holdings LLC filed for Chapter 11 bankruptcy protection. Kirkland & Ellis was hired as the company's bankruptcy law firm. Moelis & Company served as the financial advisor.

On September 10, 2009, Muzak said it had filed a reorganization plan which would cut the company's debt by more than 50%. The plan would pay all banks everything they were owed in some form and would give high-ranking unsecured creditors ownership in the reorganized company. Other creditors would receive warrants to buy stock. The company said an "overwhelming majority" of unsecured creditors supported the plan.

On January 12, 2010, the U.S. Bankruptcy Court approved the plan to reduce Muzak's debt by more than half, allowing Muzak to officially emerge from bankruptcy.

Following bankruptcy, the company announced an initiative to realign its corporate structure into three specialized business units: Muzak Media; Touch, a Muzak Co.; and Muzak Systems. These units will focus on content acquisition, Sensory Branding, and new delivery platform technology.

In March 2011, Mood Media agreed to purchase Muzak Holdings for $345 million. On February 5, 2013, Mood Media announced it was retiring the name 'Muzak' as part of its integration plans.

Mood Media

Founded in 2004, Mood Media had a market capitalization of about $380 million as of 2011. In March 2011, Mood Media agreed to purchase Muzak Holdings for $345 million. Although Muzak first appeared in 1934, it had its largest impact in the 1960s and 1970s. In 2013, Mood Media announced it would be consolidating its services under the name Mood, ceasing to use the Muzak brand name. Muzak provided background music to over 300,000 US locations and made most of its money through multi-year contracts. In 2013, the company provided on-hold messaging and video programming, although piped music remained its forte. Mood hoped to use Muzak's US footprint to introduce more digital services. In May 2017, Mood Media filed for Chapter 15 bankruptcy protection in an attempt to restructure their debt. The following month the company was acquired by Apollo Global Management and GSO Capital Partners. In July 2020, Mood Media filed for bankruptcy, with the COVID-19 pandemic a major reason for its financial problems. The company emerged from bankruptcy in less than 24 hours due to the agreement of all stakeholders, a strong strategic plan, and a stable team. In January 2021 Mood Media was acquired by Vector Capital, a private equity firm specializing in investments in technology businesses.

References

References

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