The idea of production music began with silent films. Even early Edison films contained suggestions for music to accompany the films. This was happening as early as 1910. It wasn't until 1937 that any publisher actually started pandering to radio. Two music publishers in England: Bosworth and Boosey & Hawkes begin creating records of compositions from their catalog which more closely reflect the realistic needs of radio drama and film production. This is generally accepted as the first production music library.
In 1942 Chappell Publishers in London set up a recorded music library for radio and other media outlets. Chappell is destined to become one of the largest and most prestigious sources of Mood Music. Although the library includes a "classical" series and a "dance music" series . Around that time Capitol records began the Capitol Transcription Service to provide radio stations with production music. This later evolved into the Capitol Hi-Q library.
By the 1950s there were dozens of production music providers. I own easily 50 from Major records whose themes were used on even syndicated programs like KFMB-TVs "Bob Dale's Early Show" and others. [I'll scan one in sometime]Anther nice cheesy one is the PAMS radio jingle company. They sang a lot of ID jingles for radio stations.
http://www.reelradio.com/mpf/index.html#tcpams98a a history of PAMS jingles here: http://www.pams.com/
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