On a recent Sunday at Jiminy Peak, a small ski resort in western Massachusetts, anyone sitting in the lodge and perking up their ears would have heard roots rocker Steve Earle singing a track from his new album, followed by a deep cut from alt-country trailblazers The Jayhawks. It came as if from nowhere, as if from some invisible speaker above.

This is worth noting for a couple of reasons. Any music buff will tell you, this is not the kind of stuff you hear on commercial radio. That Steve Earle and The Jayhawks were part of a product offered by a company long associated with “elevator music” makes it even more surprising.

We’re talking Muzak. As the company nears its 75th anniversary, not only did it long ago shift its focus from the lifeless, bland instrumental versions of popular tunes that once defined the business; Muzak has put in its place original programming by original artists that are current and, depending on your taste, even hip. Their offerings, it’s safe to say, are more diverse than commercial radio.

Always there

Founded in 1934, Muzak has created a monster. It’s hard to imagine walking into a store, whether it’s a country mom-and-pop shop or a big box behemoth, and not hear music. So much so that it doesn’t always register on a conscious level. Yet music remains an integral part of a business, whether it’s a ski resort like Jiminy Peak or a hospital like Albany Medical Center — both Muzak customers.

“Most people don’t question where that’s coming from,” said Diane Montes, an account executive at a Muzak franchise in Rensselaer County. “And they don’t associate it with Muzak.”

Muzak’s reach, meanwhile, is hard to fathom. The Fort Mill, S.C., company has 400,000 clients and is heard by an estimated 100 million people a day. But while they were pretty much the only game in town for decades — along with DMX, which was founded in 1971 — more competitors are springing up. Meanwhile, business-based music is becoming much more focused, much more customized, much more tied to branding, which is leading plenty of Muzak competitors to say they can do it better.

“If you went into a Gap store and there was silence, it probably wouldn’t feel like the Gap,” said Dave Purdy, senior vice president at Muzak competitor PlayNetwork, illustrating how branding is tied to music. “In fact, it wouldn’t be the Gap.”

Creating a vibe

While sales pitches from companies in this industry sometimes focus on having the right music to keep customers lingering in stores longer, many in this industry, including executives at Muzak and its competitors, talk about creating the right experience for customers, creating a vibe that matches the brand.

Bob Finigan, Muzak’s vice president for product and marketing, had this to say: “If you think about any great retail environment, the retailer has taken a tremendous amount of effort telling the customer who they are through the way they’ve designed the space, and they try to make a connection with that customer on all different levels. You put beautiful marble floors in and you get the right lighting and the right fixtures. Music brings that all together and brings the business to life. It’s a pretty powerful tool. . . . We take into consideration the energy, the mood, the style, the ultimate lifestyle of the customer. We take little subjective things like, not only the tempo but the texture of the business. And all of our programs are engineered in a way where you get a seamless experience.”

Finigan said they even break programming into “day parts.” A customer like Marriott, for instance, will have music with a much different feel playing at breakfast than at check-in.

It’s far from those safe, boring, almost universally abhorred instrumentals once ubiquitous in doctors’ offices. Nevertheless, there’s the perception that that’s what Muzak is all about, still. Muzak competitors interviewed for this story, in fact, said the expression in the industry is that Muzak has a giant elevator on its back.

“If you look at their current branding compared to their branding from 50 years ago, they’ve been working really hard at being perceived as hipper,” said Craig Carman, senior vice president of national sales for Private Label Radio, another competitor. “If you’ve watched the logo evolve and watch terms like ‘audio architecture’ being used, they’ve been trying really hard to rebrand themselves. Unfortunately, as many years have gone by, they’re still known as the elevator channel, which is unfortunate, because it’s not entirely true.”

High-cost business

That misperception can’t help the company’s bottom line either. Muzak is still considered the industry leader, but it’s losing money. And while those losses seem to have slowed down, they’re still substantial. According to Muzak’s third quarter report from last year — the most recent available — the company lost $23.9 million through the first nine months of 2007. Still, that’s on pace to improve upon the $39.3 million lost in 2006 and the $48.6 million lost in 2005.

It’s a high-cost business, with low margins, said PlayNetwork’s Purdy, trying to explain how those losses are possible. In some cases, the equipment used runs around the clock and frequently needs servicing. In his company’s case, they serve approximately 11,000 Starbucks, and the coffee giant requires that its music be reprogrammed every month.

Meanwhile, there’s talk of a merger between Muzak and the second largest company in the business, DMX. Muzak and the Austin, Texas-based DMX want to merge, then sell to a third party. Currently, an application is pending with the U.S. Justice Department.

Muzak’s Finigan explained that the financial woes date from a late-’90s spree of acquisitions in which the company bought up roughly 25 businesses. That created a debt load that still stands.

“So we’re a pretty highly leveraged company that has done some significant turnaround through the last 18 months,” Finigan said. “We’re on our eighth or ninth quarter of positive cash flow. We’ve done over a $30 million turnaround over that time frame. We’re really ramped for growth.”

Not going away

Despite competition and the financial numbers, the tired perception about elevator music and the efforts to rebrand, the consensus is that Muzak won’t disappear. With the pending merger and the massive losses, things will change somehow, but the experience of having Muzak be part of the soundtrack of your life likely won’t.

“We don’t see the demise of Muzak,” said Purdy of Muzak competitor PlayNetwork. “They have a large account base and it’s unlikely they’ll disappear from the planet. They might go bankrupt but they won’t go away. And there might come a time when they’re not the leader. But Muzak isn’t going away.”