Inventor Major General George Owen Squier, credited with inventing telephone carrier multiplexing in 1910, developed the original technical basis for Muzak. In the early 1920s, he was granted several further US patents related to transmission of information signals, among them a system for the transmission and distribution of signals over electrical lines.

Squier recognized the potential for this technology to be used to deliver music to listeners without the use of radio, which at the time was in early state and required fussy and expensive equipment. Early successful tests were performed, delivering music to customers on New York's Staten Island via their electrical wires.

In 1922, the rights to Squier's patents were acquired by the North American Company utility conglomerate, which created the firm Wired Radio Inc. to deliver music to their customers, charging them for music on their electric bill. By the 1930s radio had made great advances, and households began listening to broadcasts picked up through the airwaves for free, supported by advertising.

Squier remained involved in the project, but as the home market became eclipsed by radio in 1934 he changed the direction of the company to deliver music to commercial clients. He was intrigued by the made-up word Kodak being used as a trademark and so took the first syllable from "music" and added the "ak" from "Kodak" to create the name Muzak which became the new name of the company.

In 1937, the Muzak division was purchased from the North American Company by Warner Bros., which expanded it into other cities. It was bought by entrepreneur William Benton who wanted to introduce Muzak into new markets like barber shops and doctors' offices. While Muzak had initially produced tens of thousands of original artist recordings by the top performers of the late 1930s and 1940s, their new strategy required a different sound.

Stimulus progression
The company began customizing the pace and style of the music provided throughout the workday in an effort to maintain productivity. The music was programmed in 15-minute blocks, gradually getting faster in tempo and louder and brassier in instrumentation, to encourage workers to speed up their pace. Following the completion of a 15-minute segment, the music would fall silent for 15 minutes. This was partly done for technical reasons, but company-funded research also showed that alternating music with silence limited listener fatigue, and made the "stimulus" effect of Stimulus Progression more effective.

This was the time when Muzak began recording their own orchestra—actually a number of orchestras in studios around the country, indeed around the world—composed of top local studio musicians. This allowed them to strictly control all aspects of the music for insertion into specific slots in the Stimulus Progression programs.

A growing awareness among the public that Muzak was targeted to manipulate behavior resulted in a backlash, including accusations of being a brainwashing technique and court challenges in the 1950s. However, the popularity of Muzak remained high through the mid-1960s. President Dwight D. Eisenhower was the first president to pump Muzak into the West Wing, and Lyndon B. Johnson owned the Muzak franchise in Austin, Texas. NASA reportedly used Muzak in many of its space missions to soothe astronauts and occupy periods of inactivity.

Original artist programming
With the rise in youth culture and the growing influence of the baby boomer generation in the 1960s and 1970s, Muzak saw their popularity decline and market share erode, in favor of newer "foreground music" companies such as AEI Music Network Inc. and Yesco that offered so-called "original artist music programming." These businesses licensed the original recordings, instead of instrumental re-recordings, and included vocal music. Every style of music was offered, from rock and pop to Spanish-language programming (for Mexican restaurants), jazz, blues, classical and even "easy listening." Foreground music markets included restaurants, fashion stores, retail outlets, malls, dental offices, airlines, and public spaces. When Muzak began programming original artists in 1984, it was after merging with Yesco, and the programming was done by Yesco. This necessitated abandonment of the Stimulus Progression concept.

A small contingent of Muzak's business continued to provide their trademarked background music sound where it remained popular, particularly in Japan.