The psychoacoustic masking codec was first proposed in 1979, apparently independently, by Manfred R. Schroeder, et al. from Bell Telephone Laboratories, Inc. in Murray Hill, NJ, and M. A. Krasner both in the United States. Krasner was the first to publish and to produce hardware for speech (not usable as music bit compression), but the publication of his results as a relatively obscure Lincoln Laboratory Technical Report did not immediately influence the mainstream of psychoacoustic codec development. Manfred Schroeder was already a well-known and revered figure in the worldwide community of acoustical and electrical engineers, but his paper was not much noticed, since it described negative results due to the particular nature of speech and the linear predictive coding (LPC) gain present in speech. Both Krasner and Schroeder built upon the work performed by Eberhard F. Zwicker in the areas of tuning and masking of critical bands, that in turn built on the fundamental research in the area from Bell Labs of Harvey Fletcher and his collaborators. A wide variety of (mostly perceptual) audio compression algorithms were reported in IEEE's refereed Journal on Selected Areas in Communications. That journal reported in February 1988 on a wide range of established, working audio bit compression technologies, some of them using auditory masking as part of their fundamental design, and several showing real-time hardware implementations.

What was first proposed in 1979?