The MP3 format was given its name in 1995, but its development began years before. MP3's roots were in lots of earlier digital encoding research, perhaps most notably the doctoral work of Karlheinz Brandenburg, who is often cited as the format's inventor. He, however, would be the first to tell you that he didn't do it alone.
In the early 1980s, Brandenburg studied electrical engineering and mathematics at Erlangen University, and pursued his doctorate at Friedrich-Alexander University. Erlangen-Nuremberg. Professor Dieter Seitzer encouraged Brandenburg and other students to work on methods for transmitting music files over integrated services digital network (ISDN) telecommunication lines. Brandenburg studied psychoacoustics and was able to come up with a highly efficient audio compression algorithm that he called optimum coding in the frequency domain (OCF).
Brandenburg became an assistant professor and continued his research. He worked with scientists at the Fraunhofer Institute for Integrated Circuits (a member of a collection of 56 German research institutes called the Fraunhofer Society), which had a working relationship with Erlangen-Nuremberg University. At Fraunhofer, OCF was improved by the team with some contributions from researchers at Hannover University, AT&T Bell Labs and Thomson, and the adaptive spectral perceptual entropy coding (ASPEC) codec was born.
In the late 1980s and early 1990s, MPEG took proposals from various groups that hoped for their encoding methods to be adopted. MPEG chose multiple proposals that were merged into three formats: MPEG-1 Audio Layer I, Layer II and Layer III. MPEG-1 Audio Layer III was largely based on ASPEC.
Other key engineers who worked on the project at Fraunhofer were Ernst Eberlein, Professor Heinz Gerhäuser, Bernhard Grill, Jürgen Herre and Harald Popp, along with additional supporting staff. Together, they developed the software and hardware necessary for MP3 encoding and decoding. In 1993, Brandenburg officially joined the staff of the Fraunhofer Institute for Integrated Circuits as head of their Audio/Multimedia department.
In 2000, Brandenburg, Popp and Grill accepted the Deutscher Zukunftspreis award (or "German Future Prize") on behalf of the entire team for invention of the MP3. And in 2007, the Consumer Electronics Association (CEA) inducted Brandenburg, Seitzer and Gerhäuser into the CE Hall of fame for their contributions to the format. As of this writing, the main researchers all still work at Fraunhofer in various capacities, including Brandenburg, who is director of the Fraunhofer Institute for Digital Media Technology in Ilmenau, Germany. Brandenburg and others have even received a share of the profits from MP3 licensing, as dictated by German law.
Every innovation relies on prior breakthroughs, so related work that occurred before MP3 was even a thought should not be ignored. For instance, the Haas Effect was named after Helmut Haas, who presented the idea in his doctoral thesis in 1949. That same year, Claude Shannon and Robert Fanning came up with the predecessor to Huffman coding. David Huffman was a student of Fano, and he improved upon their technique in 1952. The MP3 researchers built upon the foundational work of many others, as well.
Suzanne Vega even played a small role, as Brandenburg and the team labored to compress the a cappella version of her song "Tom's Diner" without generating distortion and background noise. A portion of the song was used as test audio to determine when the quality had reached an acceptable level.