Pathé was founded by brothers Charles & Émile Pathé, who were owners of a successful bistro in Paris. About 1890 they saw an Edison phonograph demonstrated at a fair and, captivated by the device, arranged to lease one as an attraction at their bistro. The early phonograph soon brought so many curious people to the Pathé establishment that lines formed to listen to it. Some even asked about purchasing phonographs for themselves. The brothers decided that, rather than give more business to Edison, they would make their own phonographs. In 1894 they started selling their own phonographs—initially based on Edison Company design—together with blank phonograph cylinders for people to make records with. Some time later they also started marketing pre-recorded cylinder records, and by 1896 had offices and recording studios not only in Paris, but also in London, Milan, and Moscow.
In 1905 they entered the growing field of disc records, at first with single-sided discs with a recording in wax on top of a cement base. In October of 1906 they started producing discs in the more usual material of shellac. Even with this less eccentric material, Pathé discs were unlike any others. The grooves were cut vertically into the discs, rather than the more common lateral method. The grooves were wider than that used by any other company, requiring a special ball-shaped .005 inch radius stylus to track them. The discs rotated at 90 rpm (and even 120 rpm), rather than 78 or 80. The recordings started on the inside near the center of the disc, spiraling out to the edge rather than vice-versa. Possibly all of this unusual technology was a preventive measure to ensure that no other record company could sue Pathé for violating their patents. Even the record sizes were unusual; other disc records came in 7 inch, 10 inch, and 12 inch sizes, while Pathé's came in 21 cm, 25 cm, 27 cm, 29 cm, 35 cm, and 50 cm (roughly 81⁄2 inch, 10 inch, 113⁄4 inch, 12 inch, 14 inch, and 20 inch) sizes. Unsurprisingly, these Pathé system records could only be played on Pathé phonographs, which would usually not play other types of recordings.
In 1903 Pathé opened the first small warehouse in Moscow, while in 1907 there already was a record manufacturing shop on the Bakhmietievka with 12 working presses. By 1911 the company had branches in St.-Petersburg, Rostov-on-Don, Warsaw and Odessa.