It's meant to float through the air, never fully penetrating your consciousness but making your mood a little lighter and encouraging you to linger. The next time you're browsing in the Gap or tooling through Home Depot, though, perk an ear. Perhaps you'll hear some up-tempo Janet Jackson or some soulful Sheryl Crow. Shoppers are massaged daily by the sounds of this lite FM-style music, and in most stores the stuff coming out of the speakers is the latest incarnation of one of America's most maligned brand names: Muzak, the world's foremost purveyor of elevator music.
Now in its seventh decade, Muzak seems to be flourishing, but less than 10 years ago, it was a mess. If Fox had done a show back in the mid-'90s about the company, the title would have been a no-brainer: When Good Brands Go Bad. By churning out horrid instrumental versions of pop classics, butchering everyone from the Beatles to Led Zeppelin, Muzak had become a term of ridicule, a generic name synonymous with hideously bad music. A candid Muzak executive once went so far as to rank the name alongside Spam in the brand management Hall of Shame. Compounding Muzak's problems: In the early 1990s, new managers took an ill-advised turn away from the company's core strengths. By 1997, after nearly a decade with negligible revenue growth and an aborted IPO, the company's owners threw out the top echelon and brought in a new team. This is the story of how they saved a downward-spiraling brand.
If Muzak had failed, it would have meant the death of one of America's most inventive businesses. The company dates to the 1920s, when retired U.S. Army general George Squire devised a system to deliver music over telephone wires (its name combines music with Kodak, his favorite high-tech company). In the 1930s, Muzak began piping its sounds into elevators to mask the newfangled devices' squeaks and to ease riders' anxiety. But the company's real growth had little to do with elevators. It stemmed from research showing that music could improve the productivity of factory workers. "What Muzak delivered from the 1930s to the 1990s was an experience [that salesmen] couched in scientific terms and presented as a research-based management tool," says Alvin Collis, Muzak's music director.
Early on, Muzak's strategy was to buy the rights to songs-classical, pop, country, and rock-and rerecord them without vocals. "It basically involved controlling the instrumentation to remove as much emotion as possible," explains Collis. In Muzak's view, emotion in music was bad, because Muzak was "background music," a subliminal cue. If anyone so much as tapped a toe, the illusion had failed.
Once songs were vanillafied, programmers measured the tempo, texture, and energy, assigned values, and then sequenced the songs according to mathematical formulas. The music progressed in cycles engineered to act as audio caffeine: High-energy sounds came on during mid-morning and late-afternoon lulls. By the early 1970s, Muzak had crept out of factories and into retail stores.
The company grew smartly as it covered the nation with aural wallpaper. Ownership changed frequently over the years: By the late 1980s, privately held Muzak had been owned by TelePrompTer, Westinghouse, and department-store mogul Marshall Field IV before it was sold to Center Partners, an investment group. Owners ignored wisecracks because Muzak's business model led to huge profits. The company owns more than a million songs and requires fewer than two dozen staffers to mix them. The business, therefore, is highly scalable, with minimal variable costs for each additional subscriber. Today, 300,000 subscribers pay $60 to $120 a month and, on average, have been customers for 12 years.
By the 1980s, though, the business was changing. New competitors like Audio Environments began offering multiple channels of satellite-delivered music, challenging Muzak's one-melody-fits-all approach. "The technology was in our favor, but there was a philosophical difference," says marketing VP Kenny Kahn. "They started to diversify their offerings first." Muzak's pitch of "scientific music" also began losing its effectiveness, and there was even demand for-gasp!-real songs rather than bland instrumentals.
Muzak tried to adapt. In 1984, it launched FM1, a channel playing the same soft-rock songs you might hear on the radio. By 1990, its offerings had increased to 30 channels, but the expansion wasn't grounded in any real strategy. "The business wandered through the 1980s-it had more than the old product, but it hadn't really identified what the new product was," says Bill Boyd, a Muzak franchisee since 1968. Muzak's core competency had always been seen as productivity enhancement. What was its reason for being now?
A new team of managers-mostly former telecommunications executives-decided that Muzak's technology represented its real growth opportunity. "They saw us becoming 'America's business broadcaster,'" says Boyd. "They thought they'd be in data transmission, closed-circuit TV. It was as far as you could get from music." And it wasn't working. Muzak's brand identity was getting muddled, a fact that was apparent at its annual franchise convention. "If there were 1,500 vendors there, you had 1,500 kinds of business cards," says Kahn, who wondered why Muzak's marketing wasn't standardized the way, say, all McDonald's arches are golden. By 1997, revenue was flat, the planned IPO had been shelved, and those tech-happy bosses were fired. Boyd, who'd sold his franchises and retired, was lured back as CEO. His mission: to put the company back on a fast-growth track.
The challenge was different from the one facing most marketers today. In an era obsessed with start-ups, the focus has been on creating strong brands from blank slates. But established brands like Muzak and Spam face yet a different challenge. Typical marketers hope their efforts will pay off in creating brand equity, which will lead consumers to pay a premium for a branded product; these brands suffer from negative equity, meaning customers actively avoid them. The folks at Firestone now know this problem well.
So how to reposition Muzak? Sometimes marketers scrap sick brands entirely to start from scratch. Boyd and his lieutenants quickly decided against that approach. After all, research showed that Muzak was among America's 10 most recognized brands. Instead, music chief Collis and marketing VP Kahn came to Boyd with a simple phrase: "audio architecture." Collis had seen it in a hi-fi magazine years before.
As the team worked to define the new strategy, Kahn contacted a consultant. "He was surprised I even called him back," says Kit Hinrichs, a partner at Pentagram, a marketing-design consulting firm. "He thought I would think, Here's the 800-pound gorilla of terrible elevator music." And Hinrichs admits: "That was my impression." But he says he was won over by the new managers and realized it was a no-lose assignment: "As I told them, 'If I do a lousy job, no one will know. If I do a terrific job, everyone will know.'" Today, Muzak execs credit Hinrichs with helping them redefine the company's mission.
The new strategy was obvious but effective. Instead of offering what amounted to a catalog of music, Muzak began operating more like an interior designer, helping clients make smart choices about the right music to support their branding efforts. Voilà: audio architecture. Rebuilding the company around the concept seemed in tune with the times. In the last decade, many companies-retailers in particular-have focused on brand image and shopping experience. Last year, consultant Paco Underhill wrote a book called Why We Buy: The Science of Shopping, which laid out how retailers are making subtle moves to encourage browsers to buy-from carefully selecting lighting and color schemes to designing changing rooms that optimize the try-on experience. Chains like Victoria's Secret now sell CDs of songs played in their stores, a clear sign that music matters.
For the 21 staffers in Muzak's new audio-architecture department, the work is a world apart from what it was a decade ago. "It's not about science-it's about art," says Collis. "We take an approach very similar to an advertising agency's. We ask clients questions about their image, their brand, their aspirations," then select music to match. It's much like the process in which experts choose music to accompany a movie. In fact, several of Muzak's audio architects did just that at previous jobs.
As evidence that the strategy is working, Boyd points to the 1999 signing of the Gap as a client. Other signs abound. New accounts are growing at 12 times the rate they were in 1997. The company increased in value by 150 percent when it was sold to Abry Partners for $250 million in February, just 18 months after the management shake-up. And Boyd sees still more room for growth. While most big retail chains already use music, he says, 95 percent of smaller establishments are unplowed ground. Consider beauty salons. "As far as I know, nobody had ever called on one before this year," Boyd says. "We'll have 10,000 signed up by the end of 2000, and 30,000 next year."
So this story has a happy ending-but the lesson has limits. Despite the company's transformation, the average Joe still doesn't think highly of Muzak; to consumers, it's still elevator music. Muzak has been able to flourish despite a poor public image because, in Internet parlance, it's a B2B play. It doesn't need to convince shoppers that it's new and improved. It only has to sway store managers-a specialized audience that can be reached through direct selling.
"There's still a long way to go before consumers don't use the word Muzak when they talk about bad music," says Hinrichs. "Could they do a major advertising campaign and spend money to shorten the time it takes for that to change? Maybe. But it's not the public they sell to. Customers walk into the Gap and hear great music; they don't think of it as Muzak." Given the lingering stigma, that's probably not a bad thing.
