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Muzak Holdings LLC

Company type	Private
Industry	Music, Digital Signage, Voice Messaging, Commercial Sound Systems, Drive-Thru Systems, Commercial TV Systems
Founded	1934
Headquarters	Fort Mill, South Carolina, United States
Key people	Steve K Richards, CEO
Products	Distribution of music
Number of employees	1,250
Website	www.muzak.com

Muzak Holdings LLC is a company based in metro Fort Mill, South Carolina, United States, just outside of Charlotte, North Carolina. Founded in 1934, Muzak Holdings is best known for distribution of background music to retail stores and other companies.

The word "Muzak" has always been a registered trademark of Muzak LLC although it dominated the market for so many years that the term is often used (in its lower case spelling) as a generic term for all background music.

In 1981 Westinghouse bought the company and ran it until selling it to the Fields Company of Chicago—publishers of the Chicago Sun-Times—on September 8, 1986. In March 2011, Mood Media agreed to purchase Muzak Holdings for $345 million.

History of Muzak Holdings LLC

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 their 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, including $305 million in cash. The company has chosen to consolidate Muzak into a sensory overload system to manipulate buying habits. A former Muzak employee stated, “I walked into a store and understood: this is just like a movie. The company has built a set, and they've hired actors and given them costumes and taught them their lines, and every day they open their doors and say, 'Let's put on a show.' It was retail theatre … Muzak's business wasn't really about selling music. It was about selling emotion.” Muzak’s reinvention through Mood Media will allow the company to calm their audiences and make them more susceptible to advertising.

On February 5, 2013, Mood Media announced it was retiring the name 'Muzak' as part of its integration plans.

History of delivery methods

The means of delivering Muzak have changed over the years as technology has advanced.

Via electrical lines

Inventor Major General George Owen Squier, credited with inventing telephone carrier multiplexing in 1910, developed the original technical basis for Muzak. In the early 1920s, he was granted several further U.S. patents related to transmission of information signals, among them a system for the transmission and distribution of signals over electrical lines.

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.

The rights to Squier’s patents were acquired by the North American Company utility conglomerate, which created a company named Wired Radio Inc. in 1922 to deliver music to their customers, charging them for music right on their electric bill. By the 1930s however radio had made great advances, and households began listening to broadcasts picked up through the airwaves for free, supported by advertising.

Squier remained involved in the project, but as the home market became eclipsed by radio in 1934, he founded his own company to deliver music to commercial clients. He was intrigued by the made-up word Kodak being used as a trademark and so took the first syllable from "music" and added the "ak" from "Kodak" to create the name Muzak.

Via radio

By the time a workable Muzak system was developed, commercial radio was already established. The company re-focused its efforts on using radio technology to deliver music to hotels and restaurants. The first actual delivery of Muzak to commercial customers took place in New York City in 1936.

In the early days Muzak did not have a collection of recordings from which to program, nor an orchestra of their own, so they contracted with some of the top big band orchestras of the day to provide instrumental tracks to their specifications. In this way they built up a pretty impressive library, including some of the only recordings of "The World's Hottest Harpist," Casper Reardon.

Via records

Pre-World War II, playback of Muzak's library of recordings was via special Gramophone records.

Each 16-inch non-microgroove vertical cut recording electrical transcription disc was capable of carrying up to 20 minutes of music per side, but in reality, the fidelity during the last five or six minutes or so of any conventionally cut side from the edge to the center, or the first five or six minutes of any side cut center-to-edge was unusable for transmission. This is because the sound coming off the disc would already be muffled and narrow-range in that area, adding insult to injury on the narrow-band electric lines of the period to the point of being unintelligible by the listener.

At first, it was decided that disc sides would be cut alternately from the center to the edge for odd sides and from the edge to the center for even sides as radio had done for live recording for some time.

In addition, it was hoped that programming quieter and more bass-heavy material at the center (beginning of odd sides or ends of even sides) would alleviate this problem, but it did not. Coupled with the fact that some programmers preferred louder more upbeat songs at the beginning and end of their program segments, caused them to cut odd sides outside in and even sides inside out, so that the tops and bottoms of hours would end on an upbeat note—as modern radio programmers do today.

However this practice only served to aggravate a number of the phonograph operators at the transmitter sites who, in the dim light conditions of the playback studios in those days could not keep track or read the label to discern the start location of the disc.

Therefore the decision was made to record all discs conventionally from outside-in, and to limit the first three programs in any one hour to 14 minutes and 30 seconds in length and the last program in the hour to 12 minutes and 30 seconds, leaving the rest of the time to silence. This happenstance decision, resulting from limitations in technology, actually returned a higher level of customer satisfaction compared to the constant music in the previous formats (see Stimulus Progression below).

Conventional home phonographs of the period played 10-inch or 12-inch laterally cut shellacque discs at 78 RPM. Since neither Muzak, as a licensee, nor the labels as content providers, could afford for their programs to escape out into the general public, four safeguards were put in place to prevent that from happening. Similar to the ET records used in commercial radio, and for pretty much the same reasons.

The Muzak programs were cut vertically, otherwise known as the hill-and-dale recording method. Playing a vertically cut record on a lateral-only player results in silence and destroys the disc being played on the very first try.

So even if a home user could find a vertically compliant cartridge for his phonograph, there was still the issue of disc size. Muzak programs were pressed onto 16-inch discs, to ensure that they would be unable to fit on a standard home player.

In addition, the programs were pressed into soft acetate, and later vinylite, so that if someone tried to play them on a conventional phonograph built for the rugged shellacque discs, the weight of the playback arm would destroy the Muzak discs even if they were being played by a vertically compliant cartridge.

And even if those three hurdles were to be overcome, no home phonograph of that period was able to play the 33-1/3 RPM speed at which the discs were recorded so that nobody with a conventional turntable could play them, preserving the copyright integrity.

Of course by then, the Library of Congress had already perfected the 33-1/3 speed as well, to be used in the recording of Talking Books for the Blind and Handicapped, whose players solved three of the four issues above. Their tonearms were lightweight, their platters spun at 33-1/3 and their tonearms could handle 16-inch records. If one could find a vertically compliant transcription phono cartridge from a radio station, Muzak's copyrights could be breached.

The more businesses subscribed to the phonograph service, the lower the overall cost became (economy of scale). The company aggressively pursued expanding the use of the music service to workplaces, citing research that indicated that background music improved productivity among workers.

Via reel-to-reel

After the war, Reel-to-reel audio tape recording gradually became available and Muzak adopted it to replace records. They utilized a reel size of 19 inches on four-track half-inch tape, twice the size of a modern 14-inch reel of digital multi-track tape, running at 3-3/4 inches per second (IPS). A 7-inch reel of home-recording tape normally contains 1,200 feet of standard 1.5 mil thickness tape, 10-1/2 inch studio reels contain 2,500 feet, and digital multi-track reels carry 5,000 feet, but a 19-inch Muzak reel would carry upwards of 10,000 feet on a single reel. At a speed of 3-3/4 IPS, each track could then play almost nine hours without stopping. Configured as four monaural tracks and an auto-reversing system, one tape could play continuously for over three days straight without repeating. This was important because at such an odd tape length, no sequence of songs would ever be repeated in any one work shift at any one time of the day, for weeks on end.

Via broadcast cart

In the 1960s-1980s, larger versions of the endless-loop tape cartridge, popularized as the 8-track tape, were used to deliver the programs. Originally recorded at the same speed as an 8-track, these large versions of broadcast tape cartridges "C-carts" carried 4 one-hour monaural programs at 3-3/4 IPS. Unlike records or reel-to-reels, endless loop tapes play continuously.

Tape and player quality developments such as chrome tape and noise reduction allowed the cartridges and tape speeds to shrink, first to the size of an 8-track with eight monaural programs on a tape running at 1-7/8 IPS, to the size of a modern laptop hard drive and a speed of 15/16 IPS used by the Library of Congress for Talking Books. As a result, before they were replaced with cassettes, the last of the tape cartridges were capable of carrying the same 8-1/2 hours per tape as the original 19-inch reels could carry per track.

Via cassette

Shortly thereafter, special-format chromium cassettes were available, recorded at 1-13/16, exactly halfway between the common speeds of 15/16 and normal cassette speed of 1-7/8, to prevent use on unlicensed hardware.

Via 8-millimeter videocassette

One development of Muzak delivery technology came in the form of Pulse-code modulation (PCM) programs encoded onto 8 mm video format camcorder cassettes. Since there was no video needed on the extra-wide-bandwidth tape, it was possible to encode two hours' worth of music on six separate stereophonic tracks, or 12 monaural tracks in the space. Although not widely adapted for stationary systems, the PCM format was widely used on planes, trains and buses throughout the late 1980s and early 1990s.

Via CD

These gave way to special-format CDs of the 1990s and early 2000s and were the last and best development in physical media program delivery for Muzak before satellite delivery eliminated the need. In addition, it was the first format to deliver true stereophonic sound to a wide audience, as the 8 mm format was mostly used for high-quality mono reproduction except for the occasional classical or jazz program in high-end installations.

Released in the late 1980s, each disc was recorded at 38 kHz with 12-bit sampling instead of the normal CD format with 44.1 kHz and 16 bits to prevent unlicensed use. As most malls and other public buildings already had a primary as well as a backup music system, when stereo audio was adopted, owners simply wired the primary set for the left channel and the backup set for the right channel, which required no further conversions once satellite became available.

Via satellite

In the mid-1990s broadcast delivery via geostationary broadcast satellites, direct to a satellite dish mounted on the location, became the delivery method of choice. Advances in technology minimized losses due to rain fade, wind load and other factors, and with no moving parts to maintain or physical media to deliver, cost of delivery was minimized.

History of programming

In 1937, the Muzak division was purchased from the North American Company by Warner Brothers, which expanded it into other cities. It was bought by entrepreneur William Benton. World War II saw a further increase in the popularity of Muzak, as factories pushed for ever-greater production supporting the war effort.

While Muzak had initially produced tens of thousands of original artist recordings by the top performers of the late 1930s and 1940s, their new strategy required a different sound.

Stimulus Progression

The company began customizing the pace and style of the music provided throughout the workday in an effort to maintain productivity (a technique it called "Stimulus Progression"). 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 (see above under Via records) but company-funded research also showed that alternating music with silence limited listener fatique, and made the "stimulus" effect of Stimulus Progression more effective.

This was the time when Muzak began recording their own orchestra—actually a number of orchestras in studios around the country, indeed around the world—composed of top local studio musicians. This allowed them to strictly control all aspects of the music for insertion into specific slots in the Stimulus Progression programs.

A growing awareness among the public that Muzak was targeted to manipulate behavior resulted in a backlash, including accusations of being a brainwashing technique and court challenges in the 1950s. However, the popularity of Muzak 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. Muzak was heard by approximately 100 million users daily.

Original artist programming

With the rise in the Youth culture and the growing influence of the Baby boomer generation in the 1960s and 1970s, Muzak saw their popularity decline and market share erode, in favor of newer Foreground Music companies that offered so-called "original artist music programming". These businesses licensed the original recordings, instead of instrumental re-recordings, and included vocal music. Every style of music was offered, from rock and pop to Spanish-language programming (for Mexican restaurants), jazz, blues, classical and even "easy listening". Foreground Music markets included restaurants, fashion stores, retail outlets, malls, dentist offices, airlines, and public spaces. The days of the factory or office building piping in background music were over. When Muzak began programming original artists in 1984, it was after merging with Yesco, the Seattle pioneer of Foreground Music—and the programming was done by Yesco. This of course necessitated abandonment of their cherished Stimulus Progression concept.

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

During this time Muzak became a franchise operation, with local offices each purchasing individual rights to the music, delivery technology, and brand name for their geographic areas. The company changed hands several times, becoming a division of the Field Corporation in the mid-1980s.

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 clients.

Even with the changes in format, rocker Ted Nugent used Muzak as an icon of everything "uncool" about music. In 1989, he publicly made a $10 million bid to purchase the company with the stated intent of shutting it down. His bid was refused, but served as a name-branding publicity stunt for both parties.

By the late 1990s, the Muzak corporation rebranded itself; as of 2010, Muzak distributes nearly 3 million commercially available original artist songs. Today, Muzak offers almost 100 channels of music via satellite or IP delivery, in addition to completely custom music programs tailored to their clients' needs.

According to EchoStar, Muzak's distribution provider, Muzak's business music service is broadcast on rented bandwidth from Echostar VII, in geostationary orbit at 119 degrees west longitude.

On 12 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 one year later. However, as of April 2009, the deal appeared to have faltered.

On 23 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 plenty of cash, but large amounts of debt coming due in the midst of a difficult economic climate.

Bankruptcy

On 10 February 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 adviser.

On September 10, 2009, Muzak said it had filed a reorganization plan which would cut the company's debt by more than fifty percent. 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.

External links

• Official Muzak website
• "The Sound Around", The Wire, episode five, about ambient music

Category:Fort Mill, South Carolina Category:Companies based in South Carolina Category:York County, South Carolina Category:Companies established in 1934 Category:Industrial music services Category:Private equity portfolio companies Category:Easy listening music Category:Companies that have filed for Chapter 11 bankruptcy in 2009 Category:Radio stations broadcasting on subcarriers