If a show has to make a choice, which is better: having popular songs on the musical score, or having popular songs played as source music?
Let me back up and explain what I mean. Many shows have limitations as to how much licensed music they can afford to include in any one episode. And that means, in effect, that some shows make a choice about how licensed music will usually be used. If you watch an episode of How I Met Your Mother, where many of the scenes take place in a bar, you may notice that the music playing in the background is usually generic music created by the studio music department. It only becomes “real” music if somebody puts on a song that is somehow directly related to the scene or the plot; otherwise, it’s just background noise, there to make it sound like a real bar. What the showrunners spend most of their music budget is on non-diegetic music: music that is not playing in the “real” world of the show, but is played on the soundtrack to match or bolster the emotional content of a scene. Almost every episode’s climax has a pop song or two on the soundtrack, at least in the original broadcast (some of the songs are removed for the DVD, because Fox’s DVD department is very skinflinty). What’s clear is that the creators consider it important to put real songs in the accompanying score where we’ll notice them, but not important — or at least not as important — to have real songs in scenes where a song is playing in the background.
Other shows rarely or never use real songs in a non-diegetic, music-video way, but do make an effort to use real songs whenever music is called for in the world of the show. On The Office, which has no musical score at all, music-video song tracks are never used (and as Greg Daniels mentions on a commentary, fans objected to one episode where they seemed to be using “Tiny Dancer” as non-diegetic music; they haven’t done that since), but when characters go into a bar or put on a CD at the office or in their car, it’s usually a real, recognizable recording. Reaper is another show that doesn’t usually have music video moments but does usually have a real song playing when the characters are hanging out in a bar. In other words, there are shows that mostly use songs diegetically, trying to pick songs that might actually be played in this setting and trying to avoid using generic music if possible.
And then there are some shows that use songs in both ways, diegetically and non-diegetically. One reason The Simpsons is a surprisingly music-heavy show (surprisingly because we don’t really think of it as a music-heavy show like The O.C. or Grey’s Anatomy, but it is) is that there are music-video montages — especially since Al Jean took over as showrunner — and the characters are always listening to real, frequently very expensive songs.
If there’s a choice, though, which is preferable? I would say that I prefer pop music as “source” music, though I understand why it often isn’t used that way: music is expensive (and will become even more expensive when the show needs to be released in other media), and it’s counter-intuitive to pay a lot of money for songs that the audience isn’t going to notice. But the use of real popular music on records, radios, computers, et al adds realism to a show, sometimes helps along the rhythm of a scene if used properly, and says something about the character who chooses to listen to this particular song. Michael Scott’s taste in music is sometimes used to tell us things about him. A pop song overlaid on the scene, which is not playing in the scene itself, often seems like overkill, an attempt to do the work the scene isn’t doing or the work that the original musical score is supposed to do. Whereas a pop song cleverly used within a scene can actually add something to the scene on a subconscious level, instead of just bringing the scene up to code.