For more than 100 years, music was recorded in analog wave forms and recorded onto and played back from discs with grooves carved into them. These recordings were not very spacious and not very long lasting. By 1981, it was obvious that the public was ready for a new, technologically advanced audio format. But several technologies needed to be created – digital sound, the laser and optical recording – and perfected before music could be delivered and listened to in a more efficient and permanent form.

The idea of "sampling" an analog sound wave form to create a stream of millions of binary pulses to represent that sound, thereby eliminating extraneous errors, noise and other aural impurities, dates back to the 1920s to work by Bell Labs engineer Harry Nyquist. In 1937, an English researcher, Alec Reeves, patented Pulse Code Modulation (PCM). However, the technology of the time was not capable of performing this sampling. It required the invention of the transistor in 1947.

Dr. Claude Shannon's 1948 paper also laid the foundations of information theory, and explained that "bits", short for binary digits, could carry information in a digital form. Shannon, working with Bernard "Barney" Oliver, later the founder and first director of HP's research labs, and John Pierce, who named the transistor, developed a commercially viable PCM method and patented an analog-to-digital converter (ADC) to transmit multiple phone conversations over a single set of wires. But it would be more than 30 years before PCM and the ADC could be commercialized into a consumer product.

The laser had a slightly earlier conception but a longer gestation. In 1917, Albert Einstein posited that light could be amplified and stimulated to form a powerful beam. In 1958, simultaneous with a pair of Soviet physicists, Columbia University scientists Drs. Arthur Schawlow and Charles H. Townes, who earlier had built the maser, a microwave amplifier, outlined the workings to the "laser" – Light Amplification by Stimulated Emission of Radiation. Two years later, Theodore Maiman actually built the first working laser. But it would be another 20 years before the laser was incorporated into a practical consumer product.

Both PCM and laser technologies needed a third technology – optical recording.

A researcher and audiophile, James T. Russell, at Battelle Memorial Institute in Richland, Wash., was tired of having his records wear out. In the mid-1960s he started to tinker with PCM digital recording, lasers and film media and developed a method to record sound on and play it back from a rectangular 3x5-inch glass plate with with photo-sensitive coating, patenting this optical system using a laser to read the digitized music in 1970. In 1974, Russell even succeeded in recording 20 minutes of television programming on a 4x5-inch record, a precursor to DVD, and the technology was demonstrated to representatives of several potential licensees, including Hitachi, Mitsubishi, RCA, Sony and Polygram Philips. Russell's technology later was sold to a venture capital firm, which tried to market it to several companies in the early 1980s.

Digital recording technology also was being explored by several mainstream consumer electronics and record companies. In 1979, Sony, Philips and PolyGram, led by Philips' researcher Kees Schouhammer Immink and Piet Kramer, head of the company's optical research group, began collaboration on a form of Russell's system, the compact disc, or CD. Instead of mechanical analog recording, compact discs were digital, the music was encoded in binary code onto a five-inch disc covered with a protective clear plastic coating and read by a laser.

Unlike fragile vinyl records, the CD would not deteriorate with continued play, was less vulnerable to scratching and damage from incidental everyday handling, held twice as much music and didn't need to be flipped over. The CD was an immediate sensation when it was introduced to the public in 1982. In 1988, sales of CDs surpassed vinyl records, practically ending the turntable business, and then passed the pre-recorded cassette as the country's top format for prerecorded music in 1996. The popularity of the CD enabled manufacturers to sell a flurry of new stereo components that were tagged "digital ready". Many new receivers contained either optical or coaxial digital inputs – or both – and a number of companies experimented with digital speakers that did not require a connection to an amplifier.

But the CD only could play back digital music. Now accustomed to the perfection of digital music playback, consumers demanded the ability to record digitally as well. In 1986, Sony introduced digital audio tape (DAT), followed by MiniDisc in 1992. Philips countered that same year with digital compact cassette (DCC).

None of these formats caught on simply because none of them were CD. The recordable CD was unveiled in 1990, but the first consumer CD-R decks would not be introduced to the public until the mid-1990s.

Several companies have tried to improve the already high fidelity of the CD. In 1999, the multi-channel Super Audio CD and DVD-Audio formats were introduced.

The CD also was far more portable, and portable CD players soon replaced the personal cassette player as the best traveling music solution. But despite improvements in shock resistance, the personal CD player was still quite bulky and required a consumer to carry a large collection of CDs. The CD was far more practical and portable than vinyl records and had far more fidelity that the compact audio cassette, but it wasn't the perfect portable music solution.

After several court cases, Sony, Philips and Time-Warner were ordered to pay royalties on Jim Russell's optical recording patents. Because Russell's patents belonged to the companies for whom he worked, however, he never saw a penny from his inventions.