The design philosophy of the DCC is described. The DCC system is a digital extension of the well-known compact cassette system. The main differences are: highly efficient source coding of the audio signal, called precision adaptive subband coding (PASC), resulting in excellent sound quality; digital multitrack recording, including error correction techniques; thin film techniques for head production; autoreverse feature in all players; and new features (e.g., text display). The system performance, the cassette, the tape format, and the PASC are discussed