Early 1970s: Prof. Dieter Seitzer of Erlangen-Nuremberg University in Germany begins wrestling with the problem of transmitting speech in high quality over phone lines. Although a first patent application was rejected, he establishes a group of students interested in audio coding research who start tackling the problem for their diploma and Ph.D. theses.

Late 1970s: With the introduction of ISDN and fiber optic cables for telecommunication, improved speech coding seems to become less important. As a new idea, the team of Prof. Seitzer starts research in coding of music signals.

1979: Prof. Seitzer's team develops the first digital signal processor capable of audio compression. During subsequent development, Karlheinz Brandenburg, a student in that team, starts employing psychoacoustic principles in the audio coding schemes, feeding back important findings and corrections into the science of the hearing properties of the human ear. Guided by Prof. Seitzer, Brandenburg and the team achieve continuous improvement of their coding algorithms.

1981: The Compact Disc is presented to the public. For storing audio data, it uses uncompressed linear PCM with 16 bit/sample.

1987: A research alliance is formed between Erlangen-Nuremberg University and the Fraunhofer Institute for Integrated Circuits within the framework of the European Union funded EUREKA project EU147 for Digital Audio Broadcasting (DAB). Led by Prof. Heinz Gerhäuser (Fraunhofer IIS), the joint research team puts up a functional real-time codec of the LC-ATC (Low Complexity Adaptive Transform Coding) algorithm as the basis for its research. Up to that point, LC-ATC existed only as a simulation on computer. Due to the enormous computing time required it could be tested only with a very limited amount of audio material. The real-time codec enables testing LC-ATC under real-world conditions and leads to significant algorithmic optimizations. The hardware system comprising multiple Digital Signal Processor (DSP) modules and a number of audio and data I/O interface cards is developed by a group of scientists including Harald Popp and Ernst Eberlein.

1989: Brandenburg finishes his doctoral thesis on the OCF algorithm (Optimum Coding in the Frequency Domain), a codec exhibiting a number of characteristics of the eventual mp3 technology, like a high frequency resolution filterbank, non-uniform quantization, Huffman coding, and its side information structure. The software part of the real-time system for OCF is mainly developed by Bernhard Grill under the lead of Prof. Gerhäuser. In this phase, the basic OCF technology is extended towards a system that is capable of coding audio signals at 64 kBit/s in good quality for the first time worldwide. That way, transmission of music in real-time over telephone lines could be achieved.