UNITED  STATES  EARLY  RADIO  HISTORY
THOMAS H. WHITE
       s e c t i o n       
20

Financing Radio Broadcasting (1898-1927)
  • Next SectionFakes, Frauds, and Cranks (1866-1922)
  • Previous SectionThe Development of Radio Networks (1916-1941)
  • Home PageTable of Contents / Site Search


Soon after Marconi's groundbreaking demonstrations, there was speculation about transmitting radio signals to paying customers. However, there was no practical way to limit broadcasts to specific receivers, so for a couple decades broadcasting activities were largely limited to experiments, plus a limited number of public service transmissions by government stations. During the 1922 "broadcasting boom", most programming was commercial-free, and entertainers, caught up in the excitement of this revolutionary new invention, performed for free. Meanwhile, a few people wondered how to pay for all this. In early 1922, the American Telephone & Telegraph Company began promoting the controversial idea of using advertising to finance programming. Initially AT&T claimed that its patent rights gave it a monopoly over U.S. radio advertising, but a 1923 industry settlement paved the way for other stations to begin to sell time. And eventually advertising-supported private stations became the standard for U.S. broadcasting stations.
Early Ideas and Approaches -- Government Public Service Broadcasting -- Audio Broadcasting Experiments -- Proposed Financing Alternatives -- Commercial Sponsorship -- Wired Wireless


EARLY  IDEAS  AND  APPROACHES

Radio broadcasts -- general transmissions simultaneously received at multiple locations -- were such an obvious development that it really doesn't make sense to try to identify any one person or station as the originator of the idea. Wire-based systems, including telegraph "tickers" used for transmitting stock market reports, and telephone news and entertainment services, showed the possibilities for instantaneously distributing information and audio programming. The next question was whether the same thing could be done on a wider scale, without the connecting wires. The ticker and telephone systems were financed by subscriber fees, and the Budapest Telefon Hirmondó, which began operation in 1893, received money for reading short commercials, and also charged for such things as instruction books for its language lessons. However, the wire systems were expensive to build and operate, and had limited transmission ranges and relatively small service areas. Even the simpler tickers were established only in larger cities, while the more elaborate telephone-based entertainment systems operated in an even smaller number of localities in Europe.

Some early demonstrations of short-range wireless electrical conduction and induction systems, which were developed prior to radio, included speculation about their use for broadcasting purposes. A review of Nathan Stubblefield's wireless-telephone,
Telephoning Without Wires from Trumbull White's 1902 Our Wonderful Progress, quoted the inventor as saying that, although "I have as yet devised no method whereby it can be used with privacy", despite this limitation someday his system might be used "by anyone having a receiving instrument... for the general transmission of news of every description". An article in the March 9, 1902, The Atlanta Constitution, Kentucky Inventor Solves Problem of Wireless Telephony, reprinted from The Sunny South magazine, reported on a New Year's transmission of music and spoken words to seven receivers located throughout Murray, Kentucky, with hopes for improvements so that someday "A single message can be sent from a central station to all parts of the United States." However, despite high hopes, electrical conduction and induction transmissions never got much beyond the experimental stage.

The possibility of using radio signals for broadcasting was discussed soon after Marconi's successful tests, although there was a question whether there was any way to finance the operations. In the October 14, 1898 The Electrician (London), an overview of Wireless Telegraphy noted that "there are rare cases where, as Dr. Lodge once expressed it, it might be advantageous to 'shout' the message, spreading it broadcast to receivers in all directions". But an earlier review of Oliver Lodge's presentation, Hertzian Telegraphy at the Physical Society, from the January 28, 1898 issue of the same weekly, had been dubious about the economics, stating "As to the practical applications, there were occasions when one wanted to 'shout to the world'--as in distributing political speeches to the Press--and for such a purpose the Hertz-wave and the coherer might be of service. But did not Prof. Lodge forget that no one wants to pay for shouting to the world on a system by which it would be impossible to prevent non-subscribers from benefiting gratuitously?" In an interview with Charles H. Garrett which appeared in the December 2, 1899 Success magazine, Marconi and Wireless Telegraphy, the inventor thought that restricting transmissions to a single frequency would hide broadcasts from persons who hadn't paid to receive them, so that "a news agency may flash news to its subscribers within one hundred miles in all directions, and none but its subscribers can receive it, because others are not tuned to that particular transmitter". However, this was not a feasible idea, as Marconi had vastly underestimated how easy it was to intercept transmissions, no matter what frequency was used. (Eleven years later Beach Thompson, president of Federal Telegraph, made the same technical mistake when he claimed: "At New York there will be established a station that will operate a press association and send out news matter broadcast to hundreds of newspapers. Only the receiving stations that are tuned to our system will be able to get the messages.", according to Wireless Wizard to Work Wonders, in the December 30, 1910 Hawaiian Gazette.)

One area where a form of subscription broadcasting did produce revenue, especially for the Marconi companies, was in overnight news transmissions sent out by powerful shore stations to transoceanic passenger ships -- subscribing ship lines were allowed to incorporate these Press reports in the onboard newspapers sold to passengers. The Marconi company began this service in 1904, and although there was no way to keep others, including onshore amateurs, from hearing these news summaries without paying, these non-subscribers were limited to technically skilled persons who were willing to stay up late and knew how to read Morse Code, so there was little loss of revenue. In 1910, the New York Herald began operating station OHX (later WHB), which, until 1917, provided daily news summaries as well as election returns and sports scores, again in Morse code, as reviewed by the newspaper in Herald's Wireless Service, from its February 15, 1917 issue.

GOVERNMENT  PUBLIC  SERVICE  BROADCASTING

And some "gratuitous" broadcasting was in fact introduced by numerous governments beginning in the first decade of the 1900s, for distributing public service information, such as time signals, weather and market reports, and shipping warnings. The time services were particularly popular, although because early transmitters could only transmit dots and dashes, the signals were sent as standardized tone sequences, similar to the hourly tolling of church bells. In January, 1905, the United States government began what appears to have been the world's first daily time service by radio, from its Navy shore stations, reviewed in
The First Wireless Time Signal by Captain J. L. Jayne in the October, 1912 American Jeweler. In the Wireless Club section of the March, 1909 Electrician and Mechanic, a brief report from W. V. Albert, Chief Electrician of the Boston Navy Yard, recounted the procedures in place at that facility.

In early 1913, the U.S. Navy's first high-powered station, NAA at Arlington, Virginia, began operations, and it quickly became famous for its daily broadcasts of time signals, which were particularly popular with the nation's jewelers, who previously had been largely dependent on leasing Western Union telegraph lines to get an accurate time service. H. E. Duncan, in an address to the Annual Convention of the Indiana Retail Jewelers' Association, reprinted in Wireless Time for Jewelers from the July, 1912 The American Jeweler, noted that "we are on the eve of a new condition", where anyone could take advantage "of obtaining the 'ticks' of the Naval Observatory transmitting clock", and provided basic information on how to "grab the time signals as they go by as wireless waves" for free. In anticipation of NAA's debut, Wireless Time Signal Apparatus by T. Stanley Curtis, which appeared in the October, 1912 issue of the same magazine, explained in detail the components and installation needed to set up a simple radio receiver to pick up the station's daily transmissions. In the December, 1912 issue of The American Jeweler, Notes on Wireless Time reported that NAA had commenced testing, and covered current U.S. and international services and expansion plans. Two New Wireless Time Signal Installations from the November, 1912 issue of the same magazine covered the successful installation of time-signal receiving stations at South Bend, Indiana and Newtonville, Massachusetts, while Wireless Time-Receiving Station Successfully Established by Kansas Jeweler reported in the May, 1913 Electrician and Mechanic that "To E. L. McDowell, of Arkansas City, Kans., belongs the distinction of being the first jeweler in this section, if not in the United States, to have successfully established at his place of business a wireless time-receiving station" as the proud proprietor boasted that "we are authority for time in this locality". Regulating 10,000 Clocks by Wireless, by Alfred H. Orme, from the October, 1913 Technical World Magazine, reviewed the ongoing popularity of NAA's wide-ranging time signal broadcast. Soon there were numerous Navy stations transmitting time signals, and Accuracy of Time Signals from the October, 1913 Electrician and Mechanic noted that monitoring had found a two-tenths of a second delay between the main time signal from Arlington and the Boston transmission. American Optical Co. Installs Radio Time Set from the February, 1916 The Electrical Experimenter, told of a Massachusetts firm which was taking advantage of the NAA time signals -- part of a growing trend according to the review, as a "one-way wireless station, capable only of receiving wireless messages... has now become popular among industrial concerns, who find the wireless a convenient and accurate means for receiving standard time daily at noon and 10:00 p. m."

With the introduction of standard broadcasting stations, a programming feature adopted by a number of them was to pick up NAA's time signal broadcast -- most commonly the one from 9:55 to 10:00 PM Eastern time -- and retransmit it for their listeners. Thus, each night NAA effectively became the key station for a small network of stations rebroadcasting the five minutes of dots-and-dashes that comprised the time signals -- the July 30, 1922 Sandusky Register explained How the Exact Time is Broadcasted by Radio. (In early 1923, NAA was assigned its own standard broadcasting frequency of 690 kilohertz, from which, until 1933, it daily lofted time signals into the ether).

The number of stations providing time signals continued to expand, and Technical World magazine in May, 1913 noted, in Wireless Time Service, that Beloit College in Wisconsin had also introduced a daily time signal service. Transmission of Time Signals/Weather Reports by Naval Radio Stations, from the July 1, 1915 edition of the Commerce Department's Radio Stations of the United States, reviewed daily transmissions by numerous U.S. Navy stations. 250 Amateurs Take Reports in Iowa from the September, 1916 The Electrical Experimenter reported the daily weather and news reports broadcast by Iowa State College's station, 9YI. The Eiffel Tower station in Paris, France was the best known European broadcaster of time signals at this time, and an article in the April 11, 1914 Electrical Review and Western Electrician, Vest-Pocket Wireless Receiving Instrument, reported that a portable crystal receiver, the Ondophone, was now being sold in France by Horace Hurm for picking up the Eiffel Tower time signals -- one of the first examples of a radio receiver being sold to the general public.

During World War One, the U.S. government took control of the entire radio industry, which at that time consisted almost exclusively of Morse code transmissions used for point-to-point communication. After the war ended, the U.S. Navy tried, but failed, to continue this monopoly, so in 1919 civilian stations were allowed to return to the air, and private citizens were again allowed to receive radio signals. However, the introduction of full-audio transmitters resulted in proposals by various departments of the federal government to establish broadcasting services. In particular, the Department of Agriculture began an extensive effort to use radio broadcasting to expand its traditional mission of providing information to the nation's farmers. (U. S. Agriculture Department Annual Report Extracts: 1898-1927 includes a overview of the various efforts by that department.) Beginning in December, 1920, this department inaugurated a "radio market news service" that was transmitted over the Bureau of Standards station, WWV, located in Washington, D.C., meanwhile investigating ways to cover even more of the country. In late 1920, the Post Office Department had constructed a transcontinental chain of radio stations to provide navigational information for its developing air mail service, and in mid-1921 the Agriculture Department arranged to have many of these stations broadcast daily market and weather reports, as reported by Bureau Will Extend Radio Market Service on the front page of the Agriculture Department's The Market Reporter issued on June 18, 1921. However, these initial broadcasts were generally transmitted in Morse code, which limited their audiences.

Robert B. Howell, an Omaha, Nebraska businessman who in 1922 would be elected to the U.S. Senate as a progressive Republican, and who, in December, 1921, would put one of the first private broadcasting stations, WOU, on the air in Omaha, recognized that installing audio transmitters at the Post Office stations would greatly expand the number of people who could make use of the Agriculture Department broadcasts. At a March 4, 1921 lunch with Postmaster General-designate Will Hays, Howell proposed both upgrading the Post Office stations and expanding their programming to include general news and entertainment. Hays became an enthusiastic champion of this idea. An International News Service wire report, carried in a number of newspapers, including the August 23, 1921 Brownwood Bulletin, reported that a Wireless Paper is Next Plan to Please People, as a trial run was planned for daily broadcasts of a "radio newspaper" service from the Post Office's Omaha station, "to extend the Government functions, to increase the joy of living and to put the day's news into the hands of all who wish it while it is still happening". A second wire service report, Will Hays at Head of Radio Project, appearing in papers such as the September 2, 1921 Linton Daily Citizen, covered Hays' expanding plans, which now included formation of a Bureau of Communications within the Post Office Department, which would someday lead to "the country dotted with transmitting stations having a radius of transmission of 200 miles, from which the businessman at his office, the farmer on his farm, and the urbanite in his home would receive the messages. The transmitting stations would receive the information broadcasted by wireless from Washington."

As part of this project, in September, 1921 R. B. Howell traveled to Europe to review communications advances in the Old World -- his report on radio activities, plus the Budapest Telefon Hirmondó, was included in the Radio in European Countries chapter of Charles William Taussig's The Book of Radio. Popular Science Monthly was particularly enthusiastic about the idea of federal broadcasting. In its April, 1922 issue, Armstrong Perry envisioned What Uncle Sam's Wireless Service Means to You, with a side-bar by Donald Wilhelm excitedly writing about developing "A national newspaper without paper! A government radio telephone system that would hook up every home in the land with the leaders of public affairs in Washington!" which was necessary because "Every branch of the government needs a broadcasting system to keep in touch with the public. No private agency can fill the need. The problem falls, of its own weight and importance, to the Post Office Department." In the June, 1922, issue of the same magazine, Armstrong Perry somewhat hopefully proclaimed that Uncle Sam "Gets Set" for Broadcasting. While acknowledging the expanding offerings provided by the rapidly growing number of private stations, Perry still felt that "when all is said and done, the fact remains that the future value and interest of radio to us all depends upon the government's taking over its own share of the national broadcasting work. What we want is radio service for the people from the government of the people." However, in early 1922 Will Hays had resigned as Postmaster General, and his successors, beginning with Hubert Work, do not appear to have had the same desire for the Post Office to create a Department of Communications or a government "radio newspaper".

Reflecting the decrease in interest by postal authorities, Perry noted in his article that "The Navy was the first Department to inaugurate a broadcast service", and subsequently the Navy would be most prominent agency involved in investigating the possibilities of federal broadcasting. The idea of the U.S. Navy providing a broadcast service was not new -- in late 1915, an experimental transmitter, set up by AT&T's Western Electric subsidiary at the Navy's NAA in Arlington, Virginia, had been used for test audio transmissions that were heard as far away as Paris, France and Honolulu, Hawaii, and these efforts inspired the September, 1916 The Electrical Experimenter to suggest Why Not Have the President Talk Simultaneously to "All the People?" over the NAA facilities. The idea wasn't implemented at this time, but during World War One the Navy gained extensive experience with audio radio transmitters, and its continuing experimental development after the war readily led to broader efforts. The primary station for these efforts would be NOF, located in the Anacostia section of the national capital, which began experimental broadcasts, including health reports, in 1920. Local politicians soon noticed NOF's existence, and a few began to take advantage of the station to transmit speeches to the folks back home. On March 30, 1922, Senator Harry New of Indiana broadcast a campaign speech from NOF to his supporters back in Indianapolis, Indiana, reported in Busy, New Invokes Radio in Campaign from the next day's Washington Post. But this practice soon proved controversial, and the front page of the April 1, 1922 Linton Daily Citizen reported that Senator New Stirs Unusual Rumpus, as Democratic political leaders wondered why a government radio station, operating on a government radio frequency, had been used to make a partisan political speech. And a few days later the April 9, 1922 New York Tribune reported that "NOF is dead, politically", due to the fact that Navy Secretary Edwin Denby Bars Political Speeches From All Naval Radio Stations. The April 8, 1922 issue of Aerial Age Weekly, in Protest Radio Ban on Political Talk, reported that "The American Radio Association is dissatisfied with the decision of the Government to refuse permission for the broadcasting of political speeches by Government radio and intends to seek a modification of the new rule." However, the elimination of partisan broadcasts over government stations remained in place.

Exempt from the Navy ban were events of national importance, such as presidential addresses. However, the first radio broadcast by a U.S. President is not well documented. There were multiple plans to broadcast President Harding's inauguration address on March 4, 1921, with Harding Speech Will Be Heard By San Diegans, from the December 5, 1920 San Diego Union, stating that the Magnavox and DeForest companies were working to send the speech nationwide, while Hear Harding Over Wireless, from the January 14, 1921 Niagara Falls Gazette, reported a joint effort by the U.S. army and navy. However, neither plan was realized, although a broadcast of an announcer reading the transcript of Harding's speech at KDKA, the Westinghouse station in Pittsburgh, Pennsylvania, did mislead a few people into thinking they had heard the President himself, reported by No Wireless Phone Report From Capital in the March 5, 1921 Sandusky Register. There were also statements that Harding's April 27, 1922 speech at the dedication of a Grant Memorial in Point Pleasant, Ohio would be broadcast, but although the speech was heard over a special set of loudspeakers, this also never made it to the airwaves. The first documented presidential radio broadcast took place on May 18, 1922, which featured President Harding Addressing the United States Chamber of Commerce in Washington, D.C., as reported by May 23, 1922 Washington Post. (The station that transmitted this speech is not identified, but based on the time and location the most likely candidate is NOF). Eleven days later, at the Memorial Day dedication of the Lincoln Memorial, NAA in Arlington finally got its chance to broadcast a presidential speech, five and one-half years after it was first suggested, as both that station and NOF carried the Memorial's dedication ceremonies, heralded as The President Speaks to the Greatest Radio Audience in the World, from the August, 1922 Popular Radio. (There was also a report that the President's speech, earlier in the day, at the Arlington Memorial would also be broadcast, that that proved unfounded). President Harding later addressed the U.S. Congress on December 8, 1922, and in the April, 1923 issue of Commercial America, S. R. Winters provided the details about station NOF Broadcasting the Presidential Message to Congress.

Noting the objection to using naval stations for partisan politics, Harry A. Mount's Will Radio Reform Our Politicians?, in the May, 1922 Popular Radio, suggested "why not build a radio station atop the Capitol, assign it a wavelength and set it to broadcasting the whole proceedings of the Senate and House of Representatives?", but the idea was never adopted. In the October, 1922 Popular Science Monthly, Charles E. Duffie interviewed R. B. Howell, "the country's most capable and best informed booster of a national system of broadcasting by Federal and state agencies", who explained Why I Believe in Government Radio. Commenting on his European tour of a year earlier, Howell felt that "the broadcasts received here have been largely in the nature of amusing vaudeville, and in the past few months there has been no lack of rumors from the public that this type of amusement is losing its appeal. Europeans, on the other hand, have had the broader vision of perceiving that the really magnificent future of radio lies in the spread of news and vital information." Thus, he thought that the government should set up its own high-powered stations to supplement the uninspired offerings of private stations, providing "in addition to news bulletins, market and weather reports, other features, such as short stories, discussion of popular current topics, and music and entertainment of the highest type". On December 19, 1922 an experimental transmission featuring House of Representatives floor speeches resulted in a House Debate Broadcast over NOF, reported by the next days's Philadelphia Evening Public Ledger, but the idea of regularly carrying preceedings soon met resistance in both houses of Congress, documented in "Radio Bloc" Latest Congress Threat, from the December 13, 1922 Baltimore Sun, and Drop Senate Radio Idea as Johnson is Elected from the July 25, 1923 Washington Post.

Much of the enthusiasm for federal broadcasting came from the belief that private stations would prove insufficient to offer an adequate level of public service by themselves. However, in December, 1921, both the Agriculture Department and the Weather Bureau inaugurated issuing authorizations for individual broadcast stations to transmit official market and weather reports, and the "broadcast boom" that followed in 1922 resulted in the establishment of over 500 private stations that provided coverage of the entire country at no cost to taxpayers. As a consequence of these developments, broadcasting activities by federal government began to shrink back to their original roles of basic services such as time signals and market and weather reports. Effective January 3, 1923, trendsetter NOF ended its broadcasts to the general public, reported in S. R. Winters' The Passing of "NOF" as a Broadcast Station, from the March, 1923 Radio News. Meanwhile, recognizing the opportunity of making use of the growing ranks of private stations, various governmental departments started providing information for broadcasters to incorporate into their offerings. This new policy was explained in J. C. Gilbert's Broadcasting Crop and Market News from the April 8, 1922 Telephony. Soon AT&T effectively took over the role of broadcasting special government events at its own expense, especially after its Washington telephone franchise established a local state-of-the art broadcasting station, WCAP, in 1923. When the December 4, 1923 Washington Post reported that the President's Speech Will Be Broadcast, it was over a six-station network, led by WCAP, and linked together by telephone lines, as AT&T was beginning to develop a national radio network.

In spite of the cutbacks, there would continue to be a limited amount of broadcasting by government-owned facilities, mostly by colleges, but also a few by state and local governments. One early example of a state-owned station was WOS, which operated from Missouri's capitol building in Jefferson City, and was set up primarily to serve rural listeners, as reviewed in A. B. Macdonald's Missouri Goes in for Wireless from the May 22, 1922 The Country Gentleman. Macdonald noted that because WOS was supported by public funds, state officials had to justify its existence along the lines of "What practical good is this sending of wireless messages? We know it's good from an entertainment standpoint, but if we take money that the farmer pays in taxes and spend it this way, we must know that he is getting his money's worth out of it." Although WOS remained on the air for awhile, in the United States broadcasting by government-operated stations steadily declined after this point, and WOS would fall silent in 1936, a casualty of the Great Depression.

AUDIO  BROADCASTING  EXPERIMENTS

Although it was clear that full-audio transmissions had the potential to greatly expand radio audiences, it required a couple decades of development before reliable, cost-effective audio transmitters would be perfected. The first audio broadcast using radio signals is generally believed to be Reginald Fessenden's experimental transmission on the evening of December 24, 1906 (Christmas Eve), using his new alternator-transmitter located at Brant Rock, Massachusetts, as reported by Helen Fessenden in the
first broadcast section of Builder of Tomorrows. There continued to be speculation that entertainment transmissions might be financed by somehow limiting their reception to paying subscribers. In the June, 1907 issue of The American Monthly Review of Reviews, Herbert T. Wade's Wireless Telephony by the De Forest System noted that "The great and universal appreciation of music reproduced by graphophone, telharmonium, or other device has suggested to Dr. De Forest that radio-telephony has also a field in the distribution of music from a central station, such as an opera house. By installing a wireless telephone transmission station on the roof, the music of singers and orchestra could be supplied to all subscribers who would have aerial wires on or near their homes. The transmission stations for such music would be tuned for an entirely different wave length from that used for any other form of wave telegraph or telephone transmission, and the inventor believes that by using four different forms of wave as many classes of music can be sent out as desired by the different subscribers." R. Burt's The Wireless Telephone from the November, 1908 issue of a United Wireless publication, The Aerogram, suggested that someday "The wireless message sent from one central station, in a special tone or to be more exact having a special electrical 'resistance,' may be received in every home, within the range of station, by every subscriber having a receiver corresponding to the electrical resistance of the sending station. By this means it will be possible to send news, stock quotations, lectures, monologues, music, merchants bargain announcements, etc., etc., broadcast for whomsoever may subscribe for that service." However, the lack of a means to restrict and charge for reception wasn't seen as an obstacle by everyone -- a letter from M. Freimark, Simplified Wireless Telephony, published in the April 13, 1911 Electrical World, suggested that perhaps the lack of privacy in transmitting radio signals could be an advantage because "anybody equipped with a receiver can pick up the message" that was "accessible to everybody, rich or poor", and "A city equipped with such a station could, for example, send out orders to the whole police force in an instant, publish election or ball-game returns, give free concerts to the whole population and accomplish a good many other things which would tend to better the social life of its citizens."

Over the next decade, numerous experimenters would make test broadcasts, some on regular schedules. However, initially most employed alternator or, more commonly, arc-transmitters, which never quite achieved the practicality needed for setting up a regular service, and there continued to be no way to limit reception to paying customers. It was only in the mid-1910s that the engineering question of how to effectively transmit, and receive, full-audio radio signals would be answered the same way worldwide: vacuum-tube transmitters and receivers. But the second question -- how to finance radio broadcasting -- would have multiple answers, which varied greatly by country.

Assorted examples of radio being used to generate revenue date back to some of the earliest experiments. The January 28, 1905 issue of Electrical Review reported that "Two English inventors have made an adaption of wireless telegraphy for entertaining patrons. Music boxes placed in different parts of the room are caused to play on the placing of a coin in a receptacle at a common centre." With the development of audio transmissions, just the idea of hearing "voices sent through the air" was a novelty, and some enterprising individuals made money by offering people the chance to personally witness this scientific marvel. In the March, 1938 issue of Radio-Craft, William Dubilier's entry in Reminiscences of Old-Timers remembered a Seattle amusement park owner, who in 1909 charged persons 10 cents to listen to test transmissions from an experimental station operated by Dubilier. Eleven years later, on the Asbury Park, New Jersey boardwalk, Harold Warren modified a roller chair to add a radio receiver, so riders could listen to experimental transmissions, as reviewed in Wireless Music and News for the Roller Chair Passenger, from the August 7, 1920 Scientific American.

When regularly scheduled audio transmissions started to be established, one obvious potential revenue source was the sale or barter of airtime for commercial messages. Most early broadcasts had a heavy dependency on phonograph records to provide their entertainment, and in many cases stations obtained records by bartering with a local record store or phonograph company, which provided the latest releases in return for promotional announcements during the program. This practice was independently adopted by numerous stations, going back to at least 1912, when the July 21, 1912 San Jose Mercury Herald announced not only that "Doc" Charles Herrold Will Give Concert By Wireless, but that the phonograph records played for the demonstration, featuring "some of the finest selections of music", would be provided by the Wiley B. Allen Company. (After the war Herrold returned to the airwaves, and Radio School Sends Jazz Music via Air, in the May 3, 1921 issue of the same newspaper, stated that the station's records "will be furnished by J. A. Kerwin of 84 East Santa Clara street, dealer in phonographs"). Other examples include the DeForest Radio Telephone & Telegraph Company's "Highbridge Station", 2XG in New York City, announced in Columbia Used to Demonstrate Wireless, from the November 4, 1916 issue of The Music Trade Review, while the November 15, 1919 The Talking Machine World reported that Exhibits at Electric Show in Chicago ensured that "Every wireless telephone operator in the surrounding country is thoroughly familiar with the Pathé best sellers", two December, 1919 experimental broadcasts that featured phonograph records provided by the Brunswick Phonograph Company of Chicago, as publicized by their dealers in advertisments, including one from the Terry Sullivan Jewelry Co., which ran in the January 22, 1920 Hamburg Reporter, plus a Chas. E. Wells Music Company Advertisement, in the January 20, 1920 Denver Post, which proclaimed that "The Brunswick Phonograph Scores Another Triumph". On April 6, 1920 the Lowell Radio Club made an experimental broadcast of phonograph records, and, in the May 2, 1920 Boston Globe, an advertisement noted that the participants had been "Dancing by Wireless" with The Aeolian-Vocalion. Two days of promotional advertisements, beginning in the October 30, 1920 Cincinnati Enquirer, announced an upcoming special program -- Wurlitzer presents the new November Victor Records by Wireless Telephone. This was followed by an election night broadcast, as Victor Concert by Wireless in the November 15, 1920 Talking Machine World noted that this broadcast had also included playing Victor records for entertainment. Yet another manufacturer was providing records, in this case to the Young & McCombs Company station, 9BY, in Rock Island, Illinois, for a weekly concert, as reported in Pathe Special Offer Popular in the November 20, 1920 The Talking Machine Trade.

One particularly ambitious example of this barter relationship was written up in Advertising by Radio, from the October, 1921 Radio News, as a Portland, Oregon station operated nightly by Charles L. Austin joined forces with the local Remick Song Shop. Another innovative application appeared in a December, 1921 Radio News report about a Canadian amateur selling radio equipment, who ran an advertisement in the September 20, 1921 Toronto Globe announcing that local amateurs could use their transmitters to Call "9BA" for Anything You Want for Your Wireless Apparatus. This same issue carried an article by Victor Rawlings, Radio in Department Stores which reviewed how the Hamburger's Department Store in Los Angeles, California was using its experimental station, 6XAK, to promote both the store and radio equipment sales. In its September 4, 1920 issue, the Detroit News, in Many to Get Radio Outfits, noted it had received a radiophoned purchase of a classified ad in the newspaper, while in its June 15, 1921 issue the Atlanta Constitution, in First Ad Over Radio-Phone Received by Constitution, unaware of the earlier example, claimed credit for itself as being the first time that radiotelephony had been employed to call a newspaper and purchase an advertisement. (Fourteen years earlier, the Detroit News, in its August 4, 1906 issue, reported receiving an advertisment placement by radiotelegraph in "Ads" By Wireless.) In any event, newspapers would shortly find that the radio would be far more often used as competition for advertising dollars than a way for people to purchase more newspaper ads.

In 1916, broadcasts by the DeForest Radio Telephone & Telegraph Company's "Highbridge Station", 2XG in New York City, in addition to featuring records provided by the Columbia Phonograph Company, briefly became one of the first to also include advertising messages of a more general nature, when it added announcements about products sold by the station owner. But, as noted in his autobiography -- Father of Radio (2XG advertising extract) -- Lee DeForest abruptly ended the practice when he became embarrassed by critical comments made by Western Electric engineers. Ironically, five years later Western Electric's parent company, AT&T, would become the main proponent of advertising-supported broadcasting in the United States. But DeForest continued to vigorously rail against advertising for the rest of his life -- for example, the September, 1930 issue of Radio News included Dr. DeForest designs the ANTI-AD, written by the inventor, which described a remote-control device for silencing radio commercials. This ability to eliminate advertising was, according to DeForest, "a new joy not unlike one would experience in shooting a noisy tom-cat on top of a back fence on a moonlight night and thus terminating the awful caterwaul".

PROPOSED  FINANCING  ALTERNATIVES

In
Grand Opera By Wireless from the September, 1919 issue of Radio Amateur News -- written before the introduction of organized radio broadcasting -- Hugo Gernsback reviewed the possibilities for financing broadcasts originating from opera houses. Noting the difficulty of getting radio listeners to pay for the privilege of receiving the transmissions, he declared "the only practical solution" was to request voluntarily payment for broadcasts ahead of time, and, given a ten percent participation, there would be enough revenue to support the project. Gernsback also suggested that an additional source of revenue would be to offer filmed operas -- movies were still silent at this time -- shown at scattered movie theaters and synchronized with a live radio transmission of the opera. But despite Gernback's "confident" assertion that "this scheme will be in use thruout the country very shortly", it was in fact completely unworkable.

The May 20, 1920 New York Evening Telegram reported that Orchestra Leader Diulio Sherbo had proposed building a radio station in order To Send Dance Music from City to Suburbs by Radio for paying customers. "Picking" Tunes From Air Nightly Pastime With Wireless Amateurs, from the August 8, 1920 Washington Times, noted that the weekly entertainment broadcasts by the Bureau of Standards station, WWV, in Washington, D.C. had resulted in the investigation by business interests of setting up a subscription radio service, to passenger ships, hotels and dance halls, in addition to a proposed station that "for a few dollars a week every one in Washington could have a concert by merely turning on a switch in their homes" which "would do away with the buying of new records every month". Dr. William D. Reynolds, in Dancers in Mountain Cabins Fox Trot to Wireless Tunes from the November 18, 1920 Colorado Springs Gazette, noted his company was investigating the establishment of an "ultra-modern music service" to provide dance music to the surrounding mountain resorts. However, none of these commercial plans was ever implemented.

Most of the broadcasting stations that sprang up during the boom of 1922 did not sell airtime, and their financial support depended entirely on the generosity of their owners, who saw the stations mainly as promotional vehicles. But Austin C. Lescarboura warned in the With an Eye to the Future section of his book Radio for Everybody that, because of the costs involved, "this gratuitous service cannot continue indefinitely" and advertising was inevitable. In the debut appearance of his On the Crest of the Radio Wave column, in the June, 1922 Popular Science Monthly, Jack Binns also reviewed the looming economic problems, noting that the significant expense of running a radio station meant that "free broadcasting services obviously cannot go on forever". Binns' proposed solution was for stations to broadcast scrambled signals, which could only be unscrambled by special coin-operated receivers. Although this particular approach would not be tried for radio at this time, similar setups would eventually be adopted in later decades for such thing as Subscription TV, premium channels on cable TV, and satellite TV and radio. Binns' article asked "Will we have Nickel-in-the-Slot radio receiving sets?", and Hugo Gernsback, in the The Slot-Machine Radio from the September, 1922, Science and Invention, answered -- incorrectly -- in the affirmative, declaring that "We shall shortly see this Coin-in-the-Slot radio receiver installed in hotels, railroad stations, and other public places". The February 10, 1922 issue of the entertainment trade publication Variety reported that Publishers Want Royalties on "Music by Wireless" Concerts from broadcasting stations in general, and Westinghouse in particular, and the same topic was covered in the July, 1922 issue of Popular Radio, as the question of the need to pay for musical rights was addressed by E. C. Mill, chairman of the executive board of the Music Publishers' Protective Association, in "A Public Performance for Profit?" The September, 1922 issue of the same magazine reviewed A Scheme for Paying Artists for Broadcasting which was being promoted by the National Co-Operative Radio Society -- the idea was to collect fees from its members to finance broadcasts from a network of high-powered stations, but the plan did not get very far.

In How the Radio Corporation is Using Advertising to Stabilize a New Industry, from the August 31, 1922 Printers' Ink, Waldemar Kaempffert stated that because "action of some kind was needed to stabilize the market" for "the few stations that are really necessary", and because "to build solidly for the future... was a task that could be performed only by an organization which believed in radio, and which had the resources to advertise nationally and to act nationally", it had been decided that "the Radio Corporation of America intends to guide the industry into the channels that it should follow for its own good and for the good of the public". As to the question of financing radio broadcasting, the newly formed Radio Apparatus Section of the Associated Manufacturers of Electrical Supplies had formed a corps of "responsible manufacturers" that was "considering a plan of levying on themselves a tax proportionate to the volume of their radio sales and to apply the funds thus raised to the maintenance of as many stations as may be required to broadcast". However, this overall plan was viewed with suspicion, for it appeared to call for a small number of manufacturers, dominated by RCA, controlling a reduced number of stations, also dominated by RCA, which raised the prospect of an RCA monopoly in both programming and manufacturing. RCA's industry financing idea proved to be both unpopular and impractical, and Kaempffert's subsequent review of Who Will Pay For Broadcasting?, in the December, 1922 Popular Radio, added AT&T's idea of selling airtime over networks of stations, and the possibility, in urban areas, of charging subscription fees for personal reception of "wired-wireless" transmissions.

COMMERCIAL  SPONSORSHIP

In February, 1922, AT&T announced its plan to establish a national radio network and sell airtime -- which it called "toll broadcasting" -- for programs supported by advertising. At this time AT&T believed, based on patent rights it claimed under a series of cross-licencing agreements made with various companies including General Electric and Westinghouse, that it was the only company in the U.S. allowed to operate broadcasting stations, with the exception of a few permitted to other companies under the cross-licencing agreements, plus a small number of stations which had purchased transmitters from its Western Electric subsidiary. The idea of radio stations broadcasting commercial messages was, however, very controversial. In the summer of 1922, there were already concerns about stations including commercial messages, as
Radio: Problem Created by Advertising, from the August 13, 1922 New York Times, complained that "Many a concert or lecture has been spoiled by a station broadcasting advertising information such as the price of eggs or the bargains at some store." In the July, 1922 issue of The Radio Dealer, a letter from AT&T Publicity Department employee J. H. Ellsworth gave AT&T's side of the debate in Explains Broadcasting of Advertising Programming, stating that "the fear which is sometimes expressed that advertising will destroy broadcasting is seen to be without foundation". But another Publicity Department employee, Westinghouse's J. C. McQuiston, was more skeptical, and in his article appearing in the August, 1922 Radio News, Advertising by Radio. Can It and Should It Be Done?, a caption editorialized that "Advertising by radio cannot be done; it would ruin the radio business, for nobody would stand for it". And a letter from Hugo Gernsback -- now sixteen years removed from the days when he had introduced Telimco Wireless Outfits -- proclaimed that "If the future of radio rests upon a foundation of advertising, it would be better that broadcasting did not exist at all", according to Radio and Advertising, printed in the May 6, 1923 New York Times.

In March and April, 1922, Commerce Secretary Herbert Hoover sponsored a national Conference on Radio Telephony, which in part addressed the question of radio advertising. During the meeting Hoover warned that "It is inconceivable that we should allow so great a possibility for service to be drowned in advertising chatter", and the conference recommendations for advertising standards would have restricted it to near non-existence. The final report called for "toll broadcasting" to be the least important of four categories of stations, with limited transmitting ranges, and their development kept under "close observation". Moreover, commercial messages were to be "indirect" only, and "limited to a statement of the call letters of the station and of the name of the firm responsible for the matter broadcasted". The conference report, however, was never adopted as official policy, and a year later, the report of the second national conference did not include any restrictions -- or even references -- to toll broadcasting. However, the industry continued to cast a wary eye on developments, and at the third conference, in 1924, Hoover famously warned that "if the speech by the President is to be used as the meat in the sandwich of two patent medicine advertisements there will be no radio left". However, he added that "The listeners will decide in any event. Nor do I believe there is any practical method of payment from the listeners."

Meanwhile, in spite of initial optimism, AT&T found it very difficult at first to convince potential customers to purchase radio airtime. AT&T began its broadcasting operations in New York City, which was perhaps the most difficult place in the country to try to make sales, because there were plenty of competing stations which were more than willing to carry the same programs for free. AT&T began broadcasts from its new station, WBAY, on July 25, 1922, but because of technical problems, in mid-August the broadcasts were transferred to WEAF, a station operated by AT&T's Western Electric subsidiary. Up to this point they hadn't sold any airtime; AT&T's first sponsored program over WEAF -- 15 minutes for a talk promoting a Queensboro Corporation apartment complex -- finally aired August 28, 1922. The text of this debut offering, Hawthorne Court Advertisement, comes from Gleason Archer's History of Radio to 1926.

Although the Hawthorne Court talk has often been called "the first-ever radio commercial", there actually is evidence that other stations had previously sold airtime to commercial buyers. In Jersey City, New Jersey, Frank V. Bremer reportedly leased his amateur station, 2IA, to the Jersey Review in May, 1920, charging $35 for twice-a-week broadcasts. This station was also reportedly rented out, for $50, to a second newspaper, the Jersey Journal, for a one-hour 1921-1922 New Year's broadcast, announced by that publication on the last day of the year in Jersey Journal to Broadcast New Year's Greeting by Wireless Tonight, and reviewed on January 3, 1922 by Jersey Journal New Year Greetings, by Wireless, Heard Country Over. Also, in late 1921 the American Radio & Research Corp.'s (AMRAD) experimental station, 1XE in Medford Hillside, Massachusetts, reportedly received money for reading stories from the Little Folk's Magazine and Youth's Companion. On February 7, 1922, following the recently adopted regulation that broadcasting stations had to have Limited Commercial licences, AMRAD received a new licence with the callsign WGI. A short time later, AMRAD president Harold J. Power decided to expand into commercial programming, hiring a salesman to sell 30 hours of programming a week at the rate of $1 per minute. On April 4, 1922, nearly five months before WEAF's Hawthorne ad, WGI inaugurated its commercial operations with a program sponsored by the Packard Motor Company of Boston. However, WGI's commercial programs were almost immediately suspended, with the explanation varying whether it was due to the intervention by the local District Radio Inspector, or AT&T enforcing what it felt was an infringement of its patent rights.

With an almost pathological fear of ever offending anyone, AT&T initially set very high standards for the sponsored programs it would accept for WEAF, which meant it sometimes refused to sell airtime to prospective advertisers. This provided an opportunity for competing stations whose standards weren't quite so high. In I looked and I Listened (WAAM extract), Ben Gross recalled a Newark, New Jersey, station, WAAM, which quietly sold airtime -- cash only please -- to advertisers which WEAF didn't want, at the same time worrying that federal regulators might take offense and shut the station down.

By the end of 1922, there were over 500 broadcasting stations in the United States, and AT&T, which originally thought its patent rights would give it a near-monopoly of U.S. broadcasting, claimed that all except 41 of these were infringing on its rights. At this point the phone company accepted the inevitable, and in early 1923 announced that it would, for the proper fee, licence its broadcasting-related patents to the infringing stations. However, in the words of Erik Barnouw, "The hundreds of stations did not rush to comply." Finally, in early 1924 AT&T filed a patent-infringement lawsuit against WHN in New York City, which was eventually settled out of court. At the time of this settlement, WHN management loudly complained that the licence agreement prohibited them from carrying advertising. This quickly brought an outcry against AT&T's supposed plan to "monopolize" radio, although Radio Broadcast opined that if any company were to monopolize the radio industry, perhaps AT&T wasn't a bad choice. However, the WHN charges were false -- there were no restrictions on commercial broadcasts in the agreement, and in fact all stations settling with AT&T were permitted to sell advertising, and also gained access to telephone company lines for remote broadcasts. Radio Broadcast's corrected report on the controversy, Licensing Broadcasting Stations, appeared in its August, 1924 issue. At this point, the rest of the broadcasting stations followed WHN's lead, and those that wanted to remain on the air paid for AT&T patent licences.

By the mid-1920s, many broadcasting stations found themselves facing increasing financial pressure. In addition to the AT&T patent licence fees, entertainers started to demand payment for their performances in something more tangible than publicity, and tighter government engineering standards required better -- and more expensive -- station equipment. Copyright holders had traditionally kept track of new forms of "reproducing mechanisms" -- at December, 1906 Copyright Hearings, R. H. Broker, vice-president of the American copyright league, referred to the Telharmonium and the Budapest Telephone Hirmondó in stating that use of musical and literary works by these sort of systems should result in royalty payments comparable to that provided by older media. With the development of radio broadcasting, music publishers successfully argued that they were due compensation for all copyrighted music that was aired, even if the stations weren't collecting any revenues. This led to more and more stations selling airtime, although radio advertising continued to be controversial. In its March, 1925 issue, Radio Broadcast magazine announced that the winner of its $500 contest soliciting the best essay on the topic of Who Is to Pay for Broadcasting--and How? was H. D. Kellogg, Jr., of Haverford, Pennsylvania, who proposed an annual tax of $2 on each tube, and $.50 on each crystal that was used in listener's radio receivers, with the collected funds administered by a Federal Bureau of Broadcasting. Kellogg's proposed funding method, "untrammeled by any commercialism or advertising", was almost completely ignored.

The fact that the magazine saw the need to run the contest suggested it didn't believe on-air advertising was a suitable solution. However, with only a few exceptions, at this time no other financing ideas proved feasible for United States stations. WHAS in Louisville, Kentucky, after operating its first three years without commercials, began carrying advertising in late 1925, which prompted one irate listener to write "If it's the last act of my life, I'm going to invent something to turn my radio off during those advertising talks, and turn it on again when the music starts!", according to Credo Fitch Harris' 1937 Microphone Memoirs (advertising extract). But there was no turning back, and even Radio Broadcast magazine eventually endorsed advertiser sponsored broadcasting in general, and AT&T's network in particular, in articles like Austin C. Lescarboura's How Much It Costs to Broadcast, which ran in its September, 1926 issue. And what became known as the "American Plan" for financing broadcasting -- private stations supported by on-air advertising -- remains the most common method used in the United States to this day.

After a couple of years of shaky finances, AT&T's "toll broadcasting" experiment eventually began to generate significant revenues, especially once its network operations started up. In particular, weekly network programs, beginning with "The Eveready Hour" on October 6, 1924, greatly expanded advertiser interest and network billing. Meanwhile, AT&T had used its interpretation of the cross-licencing agreements it had with the "radio group" (General Electric, Westinghouse, and the Radio Corporation of America) to prohibit them from selling airtime, so as these companies' program offerings got more ambitious, they also began to lose increasingly large sums of money. By mid-1925 there was starting to be a financial crisis for the radio group due to the increasing expenses of their broadcasting stations, and a committee was formed to study whether they could continue to support broadcasting operations without selling advertising. The committee's conclusion was "there is no way". Around this time, the cross-licencing agreements between AT&T and the radio group unraveled, freeing the latter to make commercial broadcasts, at the same time that AT&T was deciding to exit the programming side of radio. According to Gleason Archer's Big Business and Radio, in late 1925, as the radio group was still contemplating their purchase of WEAF's radio network, General Electric and Westinghouse employees reviewing the proposal specified that the reorganized network should "have the exclusive right to broadcast for revenue so far as that right can be given it". However, due to AT&T's earlier settlement with the broadcasting industry, the radio group would not be able to monopolize commercial broadcasting.

When stations began selling airtime, advertiser influence naturally increased. Around late 1928, NBC president "Deac" Aylesworth received a somewhat surreal demonstration of the saying "He who pays the piper calls the tune" when his top advertiser, George Washington Hill of the American Tobacco Company, decided on a unique "test" of the dance music sponsored by his firm. As recounted in Ben Gross' book I Looked and I Listened (George Washington Hill extract), in order to "evaluate" the programs, Hill commandeered the NBC Board of Director's room for weekly dancing with a company model, moreover, he insisted that Aylesworth join the two, compelling the NBC president to dance with another NBC executive, Program Manager Bertha Brainard. (Another odd incident Gross related in his book was "a mysterious bearded old man who bought a minute of time daily over WLTH of Brooklyn to say, 'I love you!... I love you!... I love you!' Whom, what or why he loved, he would not explain and the station did not care.")

WIRED  WIRELESS

After broadcasting became popular, a common observation was that one of radio's perceived flaws -- the lack of privacy, since anyone who wanted to could listen to a signal -- had actually turned out to be its greatest strength. But even after the rise of radio broadcasting, a few experimenters continued to try to develop a way to set up multi-program audio services that were limited to paying subscribers. One alternative to over-the-air broadcasting dated back to work begun in 1910 by General George Owen Squier of the U.S. Army Signal Corps. General Squier noted that because metallic wires act as wave-guides for radio signals, multiple low-power transmissions could be carried along telegraph, telephone or electrical wires to distant points, and received only by persons located along the line. Squier became an evangelist for what he called "wired wireless" -- later known as "carrier current" transmissions -- and over succeeding decades the basic idea has been developed into a wide variety of innovations, from audio services to Cable TV. An early adaptation was by electrical companies, for private long-distance telephone service along their power lines, with a successful test reported in
Power Company Experimenting with "Wired Wireless", from the September 11, 1920 Telephony. In the August, 1922 Popular Science Monthly, Jack Binns' "On the Crest of the Radio Wave!" column reviewed General Squier's ideas in Can Wired Wireless Change Radio Broadcasting?. However, Binns was skeptical about this innovation's potential, and noted the limitations compared to radio, in both the number of programs offered, and the difficulty in covering rural areas, especially in the many regions which didn't have electricity at this time. Giving the Public a Light-Socket Broadcasting Service, by William Harris, from the October, 1923 Radio Broadcast magazine, reviewed an early (and ultimately unsuccessful) attempt to set up a subscription-based "wired radio" programming service in Staten Island, New York City.

 
"In seeking the good will and support of the public, big business has attempted to propagate a convenient but misleading idea. Its public-relations experts have sought to persuade us that it is to big business, in terms of its annual investment of millions of dollars in radio, that we owe the fine program services we get. Accompanying this questionable claim there is often the suggestion that we, the public, are therefore somehow beholden to the advertiser and to the networks and stations, as though a benefit had been conferred for which we should be grateful. There is no doubt that many innocent listeners genuinely feel beholden in this way and regard themselves as fortunate beneficiaries of a generous patron. This is a dangerously sentimental state of mind, implying a subservience on the part of the public which is neither justified nor healthy. Business is not philanthropy. It is a system of exchange. The businessman provides us with the goods and we provide him with his profits. We can cry quits on the deal. We should never feel subservient or anything but incidentally grateful."--Charles A. Siepmann, Radio's Second Chance, 1946.