This article gives a brief summary of the history and origins of the mp3 scene. Some of the below adapted from an article written by Netfrack of CDA
Prior to MP3, a music warez scene would have been prohibitive due to the filesizes of uncompressed WAVs coupled with the slow connection speeds at the time. The MP3 codec had been in development for several years and the first (command line) mp3 encoder, L3enc, was released in 1993, with the first MP3 software player, WinPlay3, arriving in 1995. An article written by John C. Dvorak for PC Magazine in 1995 brought attention to the new mp3 format, and single tracks - ripped at 112kbit - began appearing across the web.
A college student using the alias 'NetFrack' discovered and experimented with the encoder and formed Compress Da' Audio (CDA) in 1996 with the intention of releasing popular music to the warez scene in the MP3 format. Although CDA is often credited as the first mp3 group, various articles suggest that groups existed as early as 95, one being Digital Music Audio (DMA). However, CDA were likely the first group to release a track using traditional warez distribution systems; topsites and BBS systems. Their first release was Until it Sleeps by Metallica, ripped by NetFraCk himself on August 10th 1996.
For a while CDA was able to "monopolize" the newly-created scene as they were the only individuals with the information to perform the conversion of CD's to MP3. When individuals from CDA shared the information publicly, two competing groups were formed: Digital Audio Crew (DAC) and Rabid Neurosis (RNS), with others following not long after.
The mp3 scene in the beginning was very basic. Windows 95 was just released, brand new computers were shipping (at maximum) 133mhz Pentiums, and 16-32 MBs of RAM. Dial-up was the internet connection of choice with 28.8 having debuted not too long before. Your hard drive (if you were lucky) was 2GB. There were no CD burners nor means of mass storage unless you were wealthy.
The three main groups then comprised of roughly ten to twenty individuals utilizing three FTP sites as a means of distribution. These sites had private and public logins. Private logins for the group members so they could gain access whenever they needed and public access for everyone to be able to download the music. These sites had a massive storage capacity of possibly 10gb. Connections at a blazing fast t1 (1.45mbps).
MP3's were originally released much like warez: single tracks, packaged using .rar compression and re-packaged again into 1.44MB zip files with a .nfo and possibly a .jpg art file. Initially the majority of releases were of classic or recently-released tracks. There was no "0-day" scene (ie. albums ripped before or on the day of public release), though this would develop around 1998. Releases were then uploaded into directories onto the FTP sites and distributed from end-user to end-user. Most groups also ran public IRC channels containing XDCC offer bots, which allowed end-users to download their releases fairly easily. These channels were kept public for the majority of the 1990's, though the majority of groups privatised them at the turn of the millennium.
There was no comradery amongst the early mp3 groups, in fact there was a good bit of malice between them. Groups were frequently involved in disputes and often resorted to 'attacks' on competing groups' IRC channels or FTP sites. This was not a phase either; competition between leading groups would continue for years to come, particularly with the development of the 0-day scene.
Initially mp3's had no attached meta data (tags) containing the artist, song title, album title, etc. In 1996 an individual using the nickname NamkraD, devised the ID3 format (now referred to as ID3v1); essentially a 128 byte suffix with a uniform structure, allowing artist name, track name, album name, and genre, as well as an additional comment (often used by groups to promote themselves). Earlier that year, a similar principle had been utilised for identifying 8-bit Nintendo ROMs, details of which were released by the group Damaged Cybernetics, led by MindRape who was also a leader of the mp3 group DAC. NamkraD (also a member of DAC & Damaged Cybernetics) took this principle and applied it to the mp3 format, thus creating ID3v1.
ID3 quickly became the de facto standard for storing meta data within mp3s, used not only by warez groups but by non-sceners too. In 1997 Michael Mutschler updated the format, allowing the inclusion of tracknumbers, and in 1998 a more complex format - ID3v2 - was released.
Initially duplicate releases (dupes) - tracks/albums already ripped by another group - were common since there was no easily-accessible database of previous releases. Duplicate releases would be 'nuked' on FTP sites; potentially damaging a groups' reputation. Many groups maintained lists of their rips, made accessible to other groups to allow checking (dupechecking) before ripping a track/album. This process would evolve into a far more advanced system in later years; a web-based dupechecking system existed in different incarnations from the late 90's onwards allowing users to easily check a database of past releases.
By 1997, connection speeds and storage capacity had increased marginally, resulting in many groups focusing on whole albums rather than individual tracks. Several new groups had formed in the meantime, most notably Apocalypse Production Crew (aPC) and Addicted to Music (ATM). Albums were generally ripped with bitrates of 112 or 128kbit, meaning a typical album would total around 30-40mb, though 160kbit albums would appear toward the end of 1997 and occasionally 192kbit the following year.