The First MP3 Player Was Sued by the Music Industry Before It Even Shipped. The Industry Lost.

Key Takeaways

• •Rio PMP300 launched September 1998 — 32 MB flash memory, 12 songs, $200, runs on 1 AA battery
• •RIAA sued Diamond Multimedia under the Audio Home Recording Act to block the device
• •9th Circuit Court ruled in Diamond's favor in June 1999 — MP3 players were legal
• •Apple launched iPod in 2001 citing Rio as proof of concept for portable digital music

Source: RIAA annual reports

Timeline

In September 1998, Diamond Multimedia announced the Rio PMP300 — a device the size of a deck of cards that played MP3 files. It had 32 megabytes of internal flash memory, enough for about 12 songs. It ran on a single AA battery for 12 hours. It cost $200. It connected to a PC via a parallel port cable.

Before the Rio shipped, the Recording Industry Association of America filed an emergency lawsuit to block it. The RIAA argued that the Rio violated the Audio Home Recording Act of 1992, which required digital recording devices to include copy-protection technology. The RIAA wanted a temporary restraining order to keep the Rio off store shelves.

The case — RIAA v. Diamond Multimedia Systems — went to the Ninth Circuit Court of Appeals. Diamond's lawyers argued that the Rio wasn't a recording device — it was a playback device. It didn't copy music. It played music that users had already ripped from CDs they owned. The Rio was, legally, a 'space shift' — the audio equivalent of recording a TV show on a VCR to watch later.

The Rio held 32 MB of music — about 12 songs. The RIAA treated it like an existential threat. They were right, just not in the way they thought.

In June 1999, the court agreed. The ruling established that portable MP3 players were legal consumer electronics, not piracy tools. It was one of the most consequential technology rulings of the decade.

The Rio PMP300 wasn't technically the first MP3 player. That distinction belongs to the MPMan by SaeHan Information Systems, released in South Korea in March 1998. But the Rio was the first to sell in significant volume in the United States — approximately 200,000 units in its first year — and the first to survive a legal challenge from the music industry.

The court ruled that playing music you already owned on a portable device was legal. That one ruling opened the door to the iPod, iTunes, and eventually streaming.

The MP3 format itself was developed by the Fraunhofer Institute in Erlangen, Germany, and finalized in 1993. It could compress audio files to roughly one-tenth their original size with minimal perceptible quality loss. By 1997, MP3 files were circulating widely on the internet, and the music industry knew it had a problem. But instead of building a legal digital music marketplace, the industry chose litigation.

Apple was watching. When Steve Jobs launched the iPod in October 2001, he cited the Rio as validation that people wanted portable digital music. But Apple fixed everything the Rio got wrong: the iPod had a 5 GB hard drive (1,000 songs instead of 12), a scroll wheel interface, FireWire for fast transfers, and — crucially — the iTunes Store in 2003, which gave the music industry a legal, profitable alternative to piracy.

Diamond Multimedia didn't survive to see the revolution it started. The company was acquired by S3 Graphics in 1999 and eventually dissolved. The Rio brand continued under other owners but faded as the iPod dominated.

The irony is inescapable. The RIAA spent millions trying to kill a device that held 12 songs. Had they invested that money in building a legal digital marketplace instead, the music industry might have controlled the transition to digital. Instead, Apple built it for them — and took 30% of every sale.

The court ruling that saved the Rio didn't just legalize an MP3 player. It legalized the future of music.

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