In 1924, a magazine ran a contest: “Who is to pay for broadcasting and how?” A century later, we’re still asking the same question

After yet another day reading about audio industry layoffs and show cancellations, or listening to podcasts about layoffs and show cancellations, I sometimes wonder, “With all this great audio being given away for free, who did we think was supposed to pay for it all?”

I find some consolation in the fact that that question is more than a century old. In the spring of 1924, Radio Broadcast posed it in a contest called “Who is to Pay for Broadcasting and How?”The monthly trade magazine offered a prize of $500 (more than $9,000 in today’s dollars) for “a workable plan which shall take into account the problems in present radio broadcasting and propose a practical solution.”

The need for such a contest more than 100 years ago is revealing enough, but the reaction of the judges to the prize-winning plan turned out to be even more so — and it says a lot about why business models for audio production and broadcast remain a struggle.

Back in the mid-1920s, radio was just starting to catch on in America. For a couple of decades, the medium had been used mostly for logistics, to help ships communicate with each other and the shore. But after World War I, new technology allowed Americans to send and receive the sounds of music, lectures, and live events over “the ether.”

By all accounts, Americans — whiplashed by war, a flu pandemic, and massive social changes like Prohibition —  went crazy to hear what the ether could deliver to the privacy of their homes. They started buying or building their own radio receivers at a pace that shocked observers. In his book This Fascinating Radio Business, Robert Landry recalls curious customers lining up behind velvet ropes to see and place orders for the latest receivers. “The size, cost, gloss and make of one’s radio was, with the family car and the family icebox, an index of social swank.”

Many stations at the time were run by department stores that wanted to demonstrate the miracle of the expensive radio sets they sold. One of the first broadcast radio stations in the country, WOR sat in the furniture department at Bamberger’s in Newark, and its first announcers were also the employees selling furniture. But as the consumer market started to be saturated, those early stations were either bleeding money or shutting down entirely. The equipment needed constant updating, the workers expected salaries, and the performers who’d once been persuaded to fill airtime “for exposure” now demanded payment.

To make things more complicated, the government required so-called “clear channel” stations (high-powered, with signals that reached far and wide) to be on the air live for 18 hours a day, forbidding the use of “mechanically reproduced” music (as in, phonograph records) to fill the time. All this made broadcasting a very expensive proposition by 1924.

I first read about the “Who Is To Pay” contest in the 1994 book Selling Radio by Susan Smulyan, who starts off noting that from the beginning, “no one knew how to make money from broadcasting.” What about advertising, the solution that seems most obvious in hindsight? The man in charge of regulating radio, then-Secretary of Commerce Herbert Hoover, hated the idea. 

“I don’t think there is anything the people would take more offense at than the attempt to sell goods over radio advertising,” Hoover declared, as part of a full-page spread in The New York Times on May 18, 1924, the same month that Radio Broadcast first announced its contest.

The Secretary had been speaking out against advertising for a few years by this point. Indirect advertising (or sponsorship, as it would soon be called) was acceptable in his mind — and via some math that’s hard to figure out, he guessed sponsorship could support about 150 stations nationwide.

Consumers in the 1920s were used to paying for telephone calls and telegrams, and there were other experiments to get listeners to pay for radio. One, dubbed “wired wireless,” licensed special devices to subscribers on Staten Island, who then got programs delivered via their power lines — a proto-version of cable TV that didn’t last long.

Other device-based ideas, like a scrambled-signal decoder, or “slot-machine” radios that would charge a nickel for two hours of listening, had already been proposed and dropped by 1924.

Radio Broadcast received close to a thousand entries to its contest. They proposed everything from a 30-day fundraising drive to the sale of copyrighted radio programming bulletins. The winner, announced in the March 1925 issue, proposed a $2 federal tax on vacuum tubes, at the time the cutting-edge technology for radio reception. The prizewinner, HD Kellogg Jr. of Haverford, Pennsylvania, reasoned that vacuum tubes were the best index of high-quality gear — the better the gear, the more radio a household could consume. Kellogg also argued that only the federal government, which already regulated radio, could collect and administer such a tax. His idea was basically a less regressive version of the licensing fee the British government already levied U.K. households to fund the BBC.

Though the contest’s judges awarded Kellogg’s proposal their prize, they were ambivalent about, if not downright hostile to, his plan. One can only imagine young Kellogg’s feelings as he read the many dismissals of his idea in later issues of Radio Broadcast. “A Government tax would be obnoxious,” wrote Paul Klugh, executive chairman of the National Association of Broadcasters. “I do not believe your prize-winning plan is feasible under conditions as they exist in this country,” wrote Secretary Hoover.

America’s radio brain trust would go on to denounce almost any federal funds for broadcasting, fearing such a model could lead to censorship. Some of that aversion makes historical sense, given that Americans could still vividly remember the ugly and heavy-handed wartime censorship of Wilson-era U.S. postmaster Albert Sidney Burleson. As Adam Hochshild writes in his chilling history American Midnight, Burleson — until he left Washington with his boss Woodrow Wilson in 1921 — used his office to seize socialist and foreign-language publications, and revoke the postal privilege of other publications that reported on the war. So when broadcasting advocates in the 1920s talked about government “censorship,” the term was not abstract — it was a recent fact.

But rather than try to figure out a smarter way to fund public-minded, high-quality broadcasting, the men behind the Radio Broadcast contest decided the real winner should be: Nothing. “For the present, I think it is better to let things ride along as they are,” wrote columnist Zeh Brouck in May 1925.

Things did ride along, straight to direct advertising. Within a few years, huge swathes of the airwaves were the province of Lucky Strikes and Jergen’s Lotion, racial minstrelsy and unbelievable quackery.

“The dignified presentation of the sponsor has too often been abandoned for hucksters’ tattle, interlarded into the middle of programs and tiresomely continued at the end,” Herbert Hoover later complained, sounding like nothing so much as a listener trying to skip past the midroll ads in an otherwise free podcast.

For many happy decades of the 20th century, advertising did make commercial broadcasters a ton of money. But as historians from Robert McChesney to Susan Douglas to Michele Hilmes have pointed out, the “American system” is uniquely unstable, and it leaves public-interest programming — or, at times, any programming at all — hard to sustain.

While researching this piece, I learned I’m not the first writer to notice an anniversary of Radio Broadcast’s contest. Back in 1995, Todd Lappin explored it in Wired. He marveled at how much the nascent Web was following the same chaotic business arc of radio. But he held out hope that things might turn out better. “Perhaps radio wasn’t the right technology. But the Web and the Net may well be,” Lappin wrote. “Our job is to make sure that glorious potential doesn’t get stuffed into yet another tired, old media box.”

In retrospect, that’s a depressing read. But there is something irresistible about the original contest, and the era when all ideas were still up for debate. We’ve had a century of letting things “ride along.” It seems like a good time to open the contest again. So what’s your idea? Who is to pay for broadcasting — and how?