Muzak Holdings

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Muzak (formerly Muzak Holdings) is a subsidiary of Mood Media best known for distribution of background music to retail stores and other companies. Mood Media purchased Muzak Holdings for $345 million in 2011, including $305 million in cash.[1][2] The company has chosen to consolidate Muzak into a sensory overload system to manipulate buying habits.[3] Muzak's restructuring through Mood Media is reportedly intended to allow the company to calm their audiences and make them more receptive to advertising.[3]

History[edit]

The word "Muzak" has always been a registered trademark of Muzak LLC,[4] although it dominated the market for so many years that the term is often used (especially when used with lowercase spelling) as a generic term for all background music.[5] 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.[5]

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 US patents related to transmission of information signals, among them a system for the transmission and distribution of signals over electrical lines.[6]

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.

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. While Muzak had initially produced tens of thousands of original artist recordings by the top performers of the late-30s and 1940s, their new strategy required a different sound.

Stimulus Progression[edit]

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").[7] 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.

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.[8] 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.[9]

Original artist programming[edit]

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.[5] 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.[10]

New business model[edit]

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.[11]

By the late 1990s, the Muzak corporation rebranded itself; as of 2010, Muzak distributes 3 million commercially available original artist songs. [10] 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 2007, Muzak Holdings, LLC announced to its employees that it might merge with DMX Music.[12] This merger was approved by the Department of Justice one year later.[13] However, as of April 2009, the deal appeared to have faltered.[14]

On 23 January 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.[15]

Bankruptcy[edit]

On 10 February 2009, Muzak Holdings LLC filed for Chapter 11 bankruptcy protection.[16] 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.[17] The company said an "overwhelming majority" of unsecured creditors supported the plan.[18]

History of Muzak Holdings LLC[edit]

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.[19]

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.[1][20] On February 5, 2013, Mood Media announced it was retiring the name 'Muzak' as part of its integration plans.[21]

Mood Media[edit]

Founded in 2004, Mood Media had a market capitalization of about $380 million as of 2011.[22] In March 2011, Mood Media agreed to purchase Muzak Holdings for $345 million.[1][2] Muzak first appeared in 1934, but had its largest impact in the 1960s and 1970s.[20] In 2013, Mood Media announced it would be consolidating its services under the name Mood, ceasing to use the Muzak brand name.[23] Muzak provides background music to over 300,000 U.S. locations and makes most of its money through multi-year contracts.[22] Now, the company provides on-hold messaging and video programming, although piped music remains its forte. Mood hopes to use Muzak's U.S. footprint to introduce more digital services.[5]

References[edit]

  1. ^ a b c ANUPREETA DAS (March 24, 2011). "Marketing analytics startup Adometry lands $8M from Shasta Ventures". Wall Street Journal. Retrieved 31 March 2011. 
  2. ^ a b "Toronto's Mood Media buys Muzak". National Post. March 25, 2011. Retrieved 9 July 2013. 
  3. ^ a b Alan Yuhas (February 13, 2013). "The malls are alive with the sound of Muzak". The Guardian. Retrieved 9 July 2013. 
  4. ^ "Wfrecruiter.com". Retrieved 9 July 2013. 
  5. ^ a b c d Luke Baumgarten (September 27, 2012). "Elevator Going Down: The Story Of Muzak". Redbull Music Academy. Retrieved 9 July 2013. 
  6. ^ "Patents". Retrieved 9 July 2013. 
  7. ^ Anika Lampe (2006). Building a better consumerism. Kaufentscheidungen durch Musik am Beispiel des Klangkonzeptes der Mall of America. University of Lueneburg. 
  8. ^ Debbie Yi. "Are you being brainwashed by Muzak?". Serendip. Retrieved 9 July 2013. 
  9. ^ Julia Finch (February 11, 2009). "Debt-laden Muzak finds that recession is a mute point". The guardian. Retrieved 9 July 2013. 
  10. ^ "ON THE ROAD THROUGH ASIA". February 6, 2009. Retrieved 9 July 2013. 
  11. ^ "Ted Nugent". Retrieved 9 July 2013. 
  12. ^ John Downey (April 13, 2007). "Muzak Seeks Merger with Rival DMX". Charlotte Business Journal. 
  13. ^ "Muzak and DMX Receive DOJ Clearance to Merge". PR Newswire. Retrieved 9 July 2013. 
  14. ^ Pete Iacobelli (April 6, 2009). "Muzak Is Still Upbeat". The News & Observer. 
  15. ^ Adam Bell (January 24, 2009). "Muzak Facing Hard Choices". The News & Observer. 
  16. ^ Muzak files for bankruptcy under heavy debt, Associated Press, February 10, 2009 
  17. ^ "Muzak reorganization plan cuts debt in half". MSN Money (Associated Press). September 10, 2009. 
  18. ^ Rochelle, Bill (September 11, 2009), A chorus of support from Muzak creditors, The Charlotte Observer 
  19. ^ Aronoff (January 13, 2010), Muzak poised to exit bankruptcy, The Charlotte Observer 
  20. ^ a b "Easy-Listening 'Muzak' Reborn As 'Mood Media'". NPR Music. February 5, 2013. Retrieved 9 July 2013. 
  21. ^ Sisario, Ben (February 4, 2013), Muzak, Background Music to Life, to Lose Its Name, New York Times 
  22. ^ a b ANUPREETA DAS (March 24, 2011). "Mood Media to Acquire Muzak for $305 Million". The Wall Street Journal. Retrieved 9 July 2013. 
  23. ^ BEN SISARIO (February 4, 2013). "Muzak, Background Music to Life, to Lose Its Name". The New York Times. Retrieved 9 July 2013. 

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