In the beginning, most broadcasting stations were commercial free, which the listeners loved. Unfortunately, that didn't pay the bills, so, for better or worse, stations began selling airtime for commercial announcements. WHAS in Louisville, Kentucky had operated without commercials since its founding in 1922--in this account station manager Credo Fitch Harris reviews the introduction of commercials in 1925, plus later events.
Microphone Memoirs, Credo Fitch Harris, 1937, pages 37-41:
That established policy continued even beyond the year when broadcasters awakened to the fact that they had been giving away a lot of valuable service which should be paid for. The bright radio manager who first adopted this new and, at the time, rather astounding policy is unrecorded. In fact, several stations may have been quietly feeling it out in a timid way--as an elephant cautiously tests the strength of a bridge before venturing to cross it. However that was, we had been on the air more than three years before it burst, apparently over night, and I remember that when it went off in my face, so to speak, an earthquake would have been less startling.
A dynamic, wholesome looking cuss dashed into my office that pleasant October morning in 1925 as if he had only ten seconds to catch a train, He came from Chicago, and brought its stimulating breezes with him. Before he talked fifteen minutes I felt like I'd been taking a guaranteed tonic for six months. His idea was explained, adopted, and The Mid-Continent Broadcasters' Association became a fact. Five other stations besides our own, representing Chicago, St. Louis, Denver, Ft. Worth,--the sixth eludes me--would take an advertising program of one hour, which he was prepared to sell. In the order named, these would cover the week--that is, Chicago on Mondays, Louisville on Tuesdays, St. Louis on Wednesdays, Denver on Thursdays, Ft. Worth on Fridays, and the one I have forgotten on Saturdays. The client, a cigar manufacturer, would thereby get coverage from some mid-continent point with great regularity. Each station would charge him $400 an hour for time and music, and the contract would run ten weeks.
Parenthetically, that client, desiring to test the pulling power of this new advertising medium, included in his copy for these microphones an offer to mail, free of charge, three cigars to everyone who wrote him. During our third week he wired an urgent appeal to the six of us: "Please stop immediately. Am using twenty girls to mail cigars and four days behind already. We cannot stand it. No one can stand it. Stop immediately." So our first customer folded up because of too much advertising, and the Mid-Continent Associates, for some forgotten cause, dissolved. But we had launched into the selling of time.
Thus was borne to the ear what is now internationally known as "the American system." The irritability it soon stirred up has never been matched on land or water. Earlier contented listeners suddenly exploded and showered us with indignant letters. One wrote: "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!"
But before this man's genius had had a chance to bloom he, like most of his countrymen, began to realize the advantage of the American system over the so-called "European system," where governments own the stations, prohibit advertising, and listeners pay a yearly tax on each receiver they own. A proportion of that levy goes for the buying of radio entertainers, and the programs are said to be inferior to ours. I do not mean that foreign countries lack artists entirely comparable to those in the States, but the broadcasts suffer from an absence of competition.
Here, large advertisers employ trained staffs to build the best available air shows, and cost means little when vieing with the standards, charm and interest of preceding and following periods. None can afford to suffer by comparisons. They pay staggering prices for Metropolitan Opera stars and choruses, symphony and dance orchestras, headliners from successful theatrical productions, tragedians, comedians, punch and punchinello, picked up from coast to coast upon a network of copper wires and brought to millions of firesides. So the American listener, in lieu of touching the nerve of his purse for another tax, rather prefers hearing a few words about some motor car or cigarette as payment for a snappier, better and greater variety of free entertainment.
An English visitor in our studios was quite interested that we should keep at hand trained substitutes for expected entertainers who, by some untoward circumstance, might fail to appear. He explained that the British Broadcasting Company would merely shut down and wait. And when I began to smile--for it really was amazing--he defensively exclaimed: "Why, shortly before I left, a chap who was to have done an hour of something never showed up at four o'clock! The station merely told us it would turn off until five. I think they were jolly well right!"
Such delightful loitering as he pictured in the English studio was sweetly reminiscent of an old swimming hole; of days spent in poetic languor down on the farm. It brought to my apathetic tendencies a pleasanter feeling than our split-second, frenzied American way. So I'm a convert to the European system! But would you tolerate it? Nay, my dear spoiled, nervous, listening children! You'd quickly take my head off!