National Broadcasting Envisaged
Letter to E. W. Rice, Jr., Honorary Chairman of the Board
General Electric Company
June 17, 1922
It seems to me that in seeking a solution to the broadcasting problem, we must recognize that the answer must be along national rather than local lines, for the problem is distinctly a national one.
Secondly, I think that the principal elements of broadcasting service are entertainment, information, and education, with emphasis on the first feature--entertainment--although not underestimating the importance of the other two elements. Expressed in other words, and considered from its broadest aspect, this means that broadcasting represents a job of entertaining, informing, and educating the nation and should, therefore, be distinctly regarded as a public service.
That this kind of job calls for specialists in the respective fields and that it requires expert knowledge of the public's taste and the manner in which to cater to the public's taste is apparent on the surface. That manufacturing companies or communcations companies are not at present organized and equipped to do this kind of job in a consistent and successful way is to my mind also clear.
If the foregoing premises be correct, it would seem that the two fundamental problems calling for a solution are:
1. Who is to pay for broadcasting?
2. Who is to do the broadcasting job?
Many suggestions have been made by well-intentioned persons on the inside and outside in an endeavor to answer both the above problems, but to my mind none of the suggestions yet made with which I am acquainted is sufficiently comprehensive or capable of withstanding the test of real analysis, and this largely because the major portion of the suggestions thus far offered build a structure on a foundation which calls for voluntary payment by the public for the service rendered through the air.
Against Payment by
With respect to problem No. 1: Attractive as the above suggestions are, I am of the opinion that the greatest advantages of radio--its universality and, generally speaking, its ability to reach everybody everywhere--in themselves limit, if not completely destroy, that element of control essential to any program calling for continued payment by the public. Stated differently, it seems to me where failure to make a payment does not enable a discontinuance of service--as, for example, in wire telephony, gas, electric light, or water supply--the temptation to discontinue payments on the ground of poor service, etc., is too great to make any system of voluntary public subscription sufficiently secure to justify large financial commitments or the creation of an administrative and collection organization necessary to deal with the general public. Therefore, if I am correct in assuming that such a foundation is insecure over a period of time, the superstructure built on this foundation is perforce equally weak.
For these reasons, I am led to the conclusion that the cost of broadcasting must be borne by those who derive profits directly or indirectly from the business resulting from radio broadcasting. This means the manufacturer, the national distributor (the Radio Corporation of America), the wholesale distributor, the retail dealer, the licensee, and others associated in one way or another with the business.
Serving the Public
As to No. 2: When the novelty of radio has worn off and the public is no longer interested in the means by which it is able to receive but, rather, in the substance and quality of the material received, I think that the task of reasonably meeting the public's expectations and desires will be greater than any so far tackled by any newspaper, theater, opera, or other public information or entertainment agency. The newspaper, after all, caters to a limited list of subscribers. The theater presents its production to a literal handful of people, but the broadcasting station will ultimately be required to entertain a nation. No such audience has ever before graced the effort of even the most celebrated artist or the greatest orator produced by the ages.
Because of these reasons, I am of the opinion that neither the General Electric Company, the Westinghouse Company nor the Radio Corporation would in the long run do justice to themselves or render satisfaction to the public if they undertook this tremendous job.
The service to be rendered distinctly calls for a specialized organization with a competent staff capable of meeting the necessities of the situation.
The plan I have in mind and one which I respectfully suggest for your consideration and discussion at the first meeting of the Broadcasting Committee is as follows:
Let us organize a separate and distinct company, to be known as the Public Service Broadcasting Company or National Radio Broadcasting Company or American Radio Broadcasting Company, or some similar name.
This company to be controlled by the Radio Corporation of America, but its board of directors and officers to include members of the General Electric Company and the Westinghouse Electric Company and possibly also a few from the outside, prominent in national and civic affairs. The administrative and operating staff of this company to be composed of those considered best qualified to do the broadcasting job.
Such company to acquire the existing broadcasting stations of the Westinghouse Company and General Electric Company, as well as the three stations to be erected by the Radio Corporation; to operate such stations and build such additional broadcasting stations as may be determined upon in the future. . . .
Since the proposed company is to pay the cost of broadcasting as well as the cost of its own administrative operations, it is, of course, necessary to provide it with a source of income sufficient to defray all of its expenses.
As a means for providing such income, I tentatively suggest that the Radio Corporation pay over to the broadcasting company 2 percent of its gross radio sales, that the General Electric and Westinghouse Companies do likewise, and that our proposed licensees be required to do the same.
Assuming, for example, that gross radio sales effected by the Radio Corporation for the year 1923, amount to $20,000,000, which would represent, roughly, $14,000,000 in billing prices for such devices made by the General Electric and Westinghouse Companies and, assuming further, that the gross volume of our proposed licensees' business for the year will be $5,000,000 the contributions to the broadcasting company for the year would be as follows:
While the total of $780,000.00 may be regarded as inadequate to defray the whole of the expense of the broadcasting company, yet I think it should be sufficient to provide for a modest beginning. Once the structure is created, opportunities for providing additional sources of income to increase the "pot" will present themselves. For example, if the business expands, the income grows proportionately. Also, we may find it practicable to require our wholesale distributors to pay over to the broadcasting company a reasonable percentage of their gross radio sales, for it will be to their interest to support broadcasting. It is conceivable that the same principles may even be extended in time to the dealers.
Sources of Income
Since the broadcasting company is to be organized on the basis of rendering a public service commensurate with its financial ability to do so and is not set up for the purpose of earning revenue, or in other words, to be a "money-making" proposition, it is conceivable that plans may be devised by it whereby it will receive public support and, in fact, there may even appear on the horizon a public benefactor who will be willing to contribute a large sum in the form of an endowment. It will be noted that these additional possibilities of income are merely regarded as "possibilities" and do not in themselves form the foundation upon which the broadcasting company is to operate.
Once the broadcasting company is established as a public service and the general public educated to the idea that the sole function of the company is to provide the public with a service as good and extensive as its total income permits, I feel that with suitable publicity activities, such a company will ultimately be regarded as a public institution of great value, in the same sense that a library, for example, is regarded today. Also, it would remove from the public mind, the thought that those who are doing broadcasting are doing so because of profit to themselves. In other words, it removes the broadcasting company itself from the atmosphere of being a commercial institution.
(Book: Pioneering in Television: Prophecy and Fulfillment,
a compilation of speeches and statements by David
Sarnoff, pp. 159-163.)