The institutional factors are without a doubt the most influential forces behind radio in its early days, in that they determined the manner in which radio was to operate.
Institutional factors refer to the driving forces behind radio: the broadcasting companies, regulatory agencies, and advertisers. They controlled the fate of radio simply because they were the ones who decided what to put on. They produced the programs, promoted the ads, and delved out the frequencies. Their priorities and goals were what guided the development and purpose early radio.
Where this really begins is with AT&T, they were the first institution to consider how consumer rad
io was to be financed. They debated between imposing fees or having it sponsored by advertising, but they soon backed out of radio to maintain their telephone monopoly due to regulatory pressures. The baton was passed to CBS and William S. Paley, a tobacco man. He realized early on the true commercial potential for radio advertising and began to exploit it. Before long advertising became the bread and butter of early radio. They even produced many of the programs themselves. These programs served not only to entertain, but to promote products with blatant placements. What had happened is that the institutional factors led radio to become an entertainment medium (as opposed to primarily educational as the BBC) funded by advertising. This made early radio consumer oriented and free to use, a perfect formula to promote prolific nationwide use. That is, until TV’s rise to power…
Picture from: http://zeltser.com/radio-history/