Classic Rock is a radio format not a genre. It contains many genres including actual oldies from the 1970s, psychedelic rock, prog-rock, and others. It is an odd format in that it has become totally entrenched in our language as if it were a genre or even if you get self-deterministic; because we all use it as if it were, it has become so.
Interestingly enough most Classic Rock stations originally played a little something we used to think of as AOR. Album-Oriented Rock. that too was a format but despite the persistence of the term, it no longer exists. The format is completely extinct! the idea was to play album cuts, in addition to (or instead of) singles.
I have seen the argument that this was also the birth of alternative rock radio. I think this is mostly crap since the term alternative rock did not even exist in 1967. I see it as something that sprung organically, decades later from another generation of pop music. I'll write that up some other time.
Previously 106.9 KMPX had been many things, a jazz station, MOR (middle of the road) and others. but in 1967 KMPX was owned by the Crosby-Pacific Broadcasting Company and was brokered ethnic and running a mighty 80,000 watts. In 1967, rock promoter Tom Donahue scraped together some favors, some cash and some chutzpa and sweet talked Station manager Ron Hunt into phasing out some foreign language programs in favor his "hippie-station" concept: album-oriented rock music with an emphasis on San Francisco-based bands, and announcers who took a more laid-back approach to the mic. By August of that year they were hippie-rock 24/7. Donahue was the First AOR PD in the nation. Months later they picked up a sister station in Pasadena KPPC. Clips of Donahue talking here:
Early on things were promising but not profitable. staff worked for little or nothing. But a year later cash was flowing, listenership was up and so were ad rates. But salaries were still ranged from terrible to non-existent. then management fired Donahue and brought in Bob Prescott as PD. This led directly to a strike by the KMPX staff on March 18, 1968.
Ever the capitalist, Leon Crosby opted not to meet the demands of the workers. in stead he brought in a replacement staff. It was much like the way Regan handled the air traffic controllers strike in 1981... except a mixing console wont kill anyone. The strike at KMPX lasted eight weeks. KMPX lost almost it's entire staff and most of it's advertisers and even lost some of it's playlits's core artists. Several rock bands including the Rolling Stones and the Grateful Dead requested the the station no longer play their music.
Then Donahue took the whole staff across the street to KSAN and reassembled his radio commune. KMPX had a limited revival but never recovered. By 1972 after a series of ownership changes they flipped to nostalgia. Today KIFR operates on the 106.9 channel in Frisco, as a Infinity Broadcasting licensee running News/talk. KSAN is still a big classic rocker. More here including a documentary film:
NOTE: the book the Art of Rock has several of the now famous psychedelic KMPX promotional station posters. You can see it here.