The 1922 U.S. broadcasting boom brought a corresponding increase in the number of radio magazines, and one of the most influential was Radio Broadcast, published by the Doubleday and Page Publishing Company of New York. However, even with the (limited) endorsement of the editor, this winning plan for establishing a national radio service "unencumbered by advertising or other irrelevant considerations" was never seriously considered as a viable method for financing United States broadcasting.
 
Radio Broadcast, May, 1924, page 69, and June, 1924, page 161:
 
WHO  IS  TO  PAY  FOR
BROADCASTING  AND  HOW?
A Contest Opened by RADIO  BROADCAST
in which a prize of $500 is offered

What We Want

    A workable plan which shall take into account the problems in present radio broadcasting and propose a practical solution. How, for example, are the restrictions now imposed by the music copyright law to be adjusted to the peculiar conditions of broadcasting? How is the complex radio patent situation to be unsnarled so that broadcasting may develop? Should broadcasting stations be allowed to advertise?
    These are some of the questions involved and subjects which must receive careful attention in an intelligent answer to the problem which is the title of this contest.

How It Is To Be Done

    The plan must not be more than 1500 words long. It must be double-spaced and typewritten, and must be prefaced with a concise summary. The plan must be in the mails not later than July 20, 1924, and must be addressed, RADIO BROADCAST Who Is to Pay Contest, care American Radio Association, 50 Union Square, New York City.
    The contest is open absolutely to every one, except employees of RADIO BROADCAST and officials of the American Radio Association. A contestant may submit more than one plan. If the winning plan is received from two different sources, the judges will award the prize to the contestant whose plan was mailed first.

Judges

    Will be shortly announced and will be men well-known in radio and public affairs.

What Information You Need

    There are several sources from which the contestant can secure information, in case he does not already know certain of the facts. Among these are the National Association of Broadcasters, 1265 Broadway, New York City; the American Radio Association, 50 Union Square, New York, the Radio Broadcaster's Society of America, care George Schubel, secretary, 154 Nassau Street, New York, the American Society of Composers and Authors, the Westinghouse Electric and Manufacturing Company, the Radio Corporation of America, the General Electric Company, and the various manufacturers, and broadcasting stations.

Prize

    The independent committee of judges will award the prize of $500 to the plan which in their judgment is most workable and practical, and which follows the rules given above. No other prizes will be given.
    No questions regarding the contest can be answered by RADIO BROADCAST by mail.

Radio Broadcast, November, 1924, page 87:
 
THE   RESULTS   OF   THE   $500   BROADCASTING   CONTEST

WILL be announced in a forthcoming number of RADIO BROADCAST. Over eight hundred manuscripts were entered in the contest and the task of selecting the best is proving a difficult one for the judges. The contest judges are Professor J. H. Morecroft, President of the Institute of Radio Engineers, Powel Crosley, Jr., President, the Crosley Manufacturing Company, Frank Reichmann, of the Reichmann Company, Chicago, Senator Royal S. Copeland, New York, and Harry Chandler, Publisher, Los Angeles TIMES.

Radio Broadcast, March, 1925, pages 863-866:
Who  Is  to  Pay  for  Broadcasting--and  How
The Plan Which Won RADIO BROADCAST'S Prize of $500 Offered for the Most Practicable and Workable Solution of a Difficult Problem

BY H. D. KELLOGG, JR.
RADIO broadcasting, to be placed on a sound economic basis, must pay its way as do other forms of entertainment. It should be paid because of, and in proportion to, the value of the entertainment provided. And the payment should be made by the consumer, that is, the owner of the receiving set.
    Under present conditions, what is entertainment for the radio fan is a subtle source of advertising, in the great majority of cases, for the broadcasting station. And advertising foots the bill. This inconsistency between the purpose of the broadcaster and the radio listener, and the differential between the source of payment and the actual consumer, has led to recognition of the fact that the economic foundation for broadcasting must be rearranged.
H. D. Kellogg
H. D. KELLOGG, JR.

Of Haverford, Pennsylvania, winner of RADIO BROADCAST'S $500 Prize Contest. A tax of $2 on each tube and $.50 on each crystal used in a receiver is proposed by this plan, and the funds so raised to be administered by a Federal Bureau of Broadcasting

    While it is apparent that a certain proportion of the expense of present-day broadcasting can continue to be borne by appropriations for the advertising received, and that artists who wish to receive the advertising that their performances bring them will perform free, still the highest type of broadcasting cannot be financed indefinitely on this basis. To secure the utmost excellence in talent, talent which needs no advertising, the performers or artists must be paid. And further to insure that program directors shall secure the best entertainment possible, untrammeled by any commercialism or advertising for the broadcasting station, the operating expense of the station should be paid directly by the radio audience.

A   YEARLY   CHARGE--TO   THE   RECEIVER

A CHARGE, then, must be collected from each owner of a radio set, on a yearly basis, sufficient to pay the annual expense of the broadcasting received. The fair and equitable way to apportion the sum each owner shall pay is on the basis of the value and range of his set and the amount it is used. We would not expect the owner of a crystal set with its limited range and sensitivity to pay as much to the broadcasting fund as the owner of a many tube superheterodyne.
    The amount paid by the radio owner should be compulsory--in other words, it should be the equivalent of a box office charge. No theatre could support the cost of regular performances open to the public in a sound and business-like way through voluntary contributions. A fixed and definite amount must be collected from each individual in the audience before entering the theatre. And likewise the owner of a radio receiving set, with his power to tap in on many sources of entertainment, should be made to pay his share of the entertainment received, commensurate with the range of his set and the amount it is used.
    Probably the best index of the range and cost of a set lies in the kind and number of its tubes. In a crystal set it is difficult to pick out any one satisfactory index of its value or use. The crystal should no doubt be taken as the index here. A charge, then, on the tubes or crystals purchased, and included in the purchase price paid by the owner of the receiving set, is the method here suggested for meeting the cost of broadcasting. Why these articles rather than any other should be taken as the criterion in laying the charge will appear from what follows.

THE   TUBE   IS   THE   INDEX   OF   THE   SET

IF EXCEPTIONAL cases be excluded, it may be said that the tubes used in receiving sets to-day have a life closely commensurate with the service they render. Two similar tubes giving identically the same service may not last each as long as the other. But in the long run, tubes of reputable manufacture in ordinary service will last a time closely enough concurrent with their usage to serve as a basis for the owner's share of the broadcasting he receives.
    With crystals the relation between use and useful life is not so satisfactory. Crystals do in time lose their sensitivity as detectors and have to be discarded. But statistics will be needed to determine accurately how long the different crystals now in use for radio reception may be expected to give satisfactory service before requiring replacement. No doubt considerable data on this subject is already available. Although this mode of gauging "broadcasting consumption" for this type of set, which it is believed involves the majority of receiving sets of to-day, is not wholly satisfactory, still no better criterion is apparently available.
    In a tube set, the number of tubes is an excellent index of the cost of the set and of the range over which it can receive. Thus a broadcasting tax on tubes will affect more the owner of the expensive set who should be required to pay more, because he is able to command a broader choice of program than the owner of the less expensive set who is correspondingly less able to pay the larger tax. Crystal sets do not as a rule involve very expensive equipment and in any event their range is usually limited, and hence a sliding tax scale here is not particularly to be desired.

A   TUBE   TAX   IS   READILY   APPLIED

THE important feature of a broadcasting levy applied to tubes and crystals is the readiness with which it can be applied. A stamp affixed to the article, or applied as a seal to the package by the manufacturer lends itself to the requirements of a strict enforcement measure. A concurrent feature is that the work of supervision and apportionment of the tax is greatly simplified. It is difficult to apply a tax to a radio set, which may consist of antenna, ground, batteries, amplifier, loud speaker, and innumerable other components or accessories. To levy a tax on all of these articles would be a clerical task of unnecessary magnitude that would make the expense of collection excessively high.
Is  This  the  Solution?

    This plan of Mr. Kellogg's, which received the prize of $500 offered by RADIO BROADCAST, won over some thousand others which were submitted. The judges were, Professor J. H. Morecroft, president of the Institute of Radio Engineers (1923-4); Major J. Andrew White, formerly editor of the Wireless Age and well-known descriptive broadcaster; Harry Chandler, publisher of the Los Angeles Times and owner of KHJ; Frank Reichmann, a Chicago radio manufacturer and an oldtimer in the field; Dr. Royal S. Copeland, United States Senator from New York, representing the public point of view; A. S. Lindstrom, chairman of the Pacific Radio Trade Association; Zeh Bouck, one of the best known radio authors in America; and Charles H. Porter, Chicago, secretary of the Radio Manufacturers' Association.
    The officials of the American Radio Association, under whose auspices the contest was conducted, do not feel that this plan is the final word in the matter of "who is to pay?" and neither do the editors of this magazine. The broadcasting problem cannot be settled as easily as this plan proposes, although without doubt there is much to be said for Mr. Kellogg's plan. One of the chief stumbling blocks is the setting up of a federal bureau of broadcasting which seems to be contrary to the entire trend of radio development. We believe that anything which smacks of too centralized federal control or censorship would be resisted as much by the public as by all those administering radio to-day. Next month we shall print an interesting discussion on the entire subject.     --T
HE EDITOR.

    Since the manufacturers of tubes is so nearly a monopoly, under the existing patents on these important products of the radio industry "bootleg" manufacturing or evasion of the tax would be difficult. Conversely, the tax on tubes would be simple and easy of application and enforcement. With crystals, however, the situation is not so simple. The production of these articles might be made into a monopoly, thus facilitating the application of the stamp tax at the point of manufacture. Or a few large wholesaling houses might be given control of the entire supply and the stamp tax applied there. It is not inconceivable that the requirement be laid down for the affixing of a stamp representing the tax at the time of sale to the ultimate consumer. But a tax collected from the manufacturer, provided there would not be too many manufacturers, could be more readily enforced and is therefore most desirable.
    The effect of a tax as outlined upon the radio industry is problematical. It would depend largely upon the additional cost of tubes and crystals to radio fans. In a later paragraph, the yearly budget needed for broadcasting purposes is briefly discussed, and the amount required from each owner of a receiving set does not seem excessive. The economic stability accorded to broad casting by the plan outlined should soon carry the industry farther forward than ever before.

THE   GOVERNMENT   SHOULD   ADMINISTER   THE   FUND

THE most practicable administrator of the broadcasting levy outlined is obviously the Federal Government. It is inconceivable to require manufacturers and producers of tubes and crystals to collect a stamp tax and turn it into a pool or fund held as a monopoly for and by private interests. The problem is clearly national in scope. It is outside the control of individual states and if run by private interests would require the granting of dangerous monopolistic power. The work of administering a national broadcasting service is not particularly susceptible to political corruption. With full publicity of all accounts, mishandling of the funds in trust would certainly be difficult. And the public would be a daily judge of the quality of entertainment provided. The tremendous value to the Goverment of having broadcasting stations continuously under its control in times of emergency, or even in ordinary times, to crystallize and direct public opinion and thought, cannot be overemphasized.
    Broadcasting under this plan would then be conducted from twenty-five or fifty high power stations throughout the country. How these may be financed can be indicated by a brief illustration. Tubes and crystals should be rated according to their quality, durability and service. A stamp purchased from the Government Division of Broadcasting should be affixed by the manufacturer to the article or its container. The amount of the stamp should be set, in accordance with statistics compiled, such that each tube will bear $2 of the broadcasting budget for the year. Similarly, the tax on each crystal sold may be apportioned so that each crystal will bear 50 cents of the broadcasting budget for the year. If we assume 4,000,000 tube sets with an average of two tubes each and 6,000,000 crystal sets in operation, the returns from taxes set at this rate would be $19,000,000. Taking $1,000,000 as the cost of collection, $18,000,00 would remain to be distributed among some twenty-five or fifty stations, allowing each $720,000 or $450,000 respectively, per year.
    It will no doubt be found desirable, in installing super-broadcasting, to take over many existing stations, though no attempt should be made to prevent present stations from broadcasting on the same basis as heretofore. New stations which may later be installed can be financed by bond issue amortized from the general broadcasting fund. A sizeable amount of the initial expense of taking over existing stations can conceivably be collected from the present owners of receiving sets as a retroactive inclusion under the collection of the stamp tax on later sales, though the payment could not be enforced without popular support. This would greatly hasten the advent of super-broadcasting, however, which otherwise would have to wait for sufficient accumulation of returns for the normal sales of tubes and crystals before it could be instituted It should be understood that while super-broadcasting will place before the public daily; the best talent, entertainment, lectures and concerts available, in a way that is now largely impossible, still the payments to artists for broadcasting service should not be as high as for public performances. There is not the expense involved for the performers in the broadcasting of a concert, either at the time of a public performance or at other times that accrues for the public performance alone. In the case of many lectures or addresses, the only expense should be that of transmission. The important feature of super-broadcasting paid by the radio listener-in is that it places broadcasting on the firm foundation of direct, paid service to the consumer and insures every day the best possible programs from well equipped stations, unencumbered by advertising or other irrelevant considerations.
 
A Summary of the Plan
  I.   Radio broadcasting must pay its way.
 II.   Person who must pay is the consumer--the radio listener.
III.   Most satisfactory mode of payment is a definite charge applied to every owner of a receiving set in proportion to range, value and amount of use of set.
IV.   This charge must be compulsory--a "box office" charge.
 V.   The best index of the range and value of a set lies in the kind and number of its tubes. In a crystal set, the crystal is the best apparent index.
        A.    Life of tubes and crystals represents with reasonable accuracy the amount of use set has.
        B.    Number of tubes is index of diversity of broadcasting programs at consumer's disposal.
        C.    Levy can be readily applied to tubes or crystals in form of stamp tax collected from manufacturer and paid by final purchaser.
        D.    Apportionment of tax greatly simplified and evasion minimized.
  VI.    Yearly tax not excessive and should not harm the industry.
 VII.    Only possible administrator of the super broadcasting fund is the Federal Government.
            A.    Problem national in scope.
            B.    Private interests would require monopolistic powers
            C.    Administration of broadcasting fund not particularly liable to political corruption.
            D.    Importance to Government of controlling broadcasting stations as means of directing public opinion.
VIII.    Concrete illustration shows how $18,000,000 a year may be raised by stamp tax for super-broadcasting purposes.
  IX.    Government will take over some existing stations and build others by bond issue amortized from broadcasting fund. Immediate fund obtained by collecting tax from sets now in use.
    X.    Conclusion that super-broadcasting for, and paid by, the consumer places broadcasting on its rightful basis.