Valdemar Poulsen patented the first magnetic sound recorder in 1898, initially using large spools of fine wire as the recording medium. In spite of the optimism of this article about the adaption of the telegraphone for such things as a telephone answering machine, it would take decades before magnetic recording was perfected to the point that it became widely used -- the most important improvement occurred in the 1930s, with the development of paper and later plastic tape which replaced the often bulky wires.
Technical World Magazine, December, 1906, pages 409-412:

A  Spool  of  Wire  Speaks
By  E.  F.  Stearns
SAID Mr. Brown to Mr. Jones:
    "I never in my life agreed to do anything of the sort!"
    "And I say that you did!" Mr. Jones replied flatly.
    "And I say again that I did not!" Just here Mr. Brown brought his fist down with a slam that made things rattle on Mr. Jones's desk. He faced him with a glare of defiance and perhaps a little cunning.
    "Then I must repeat that you did!" Mr. Jones pursued smoothly. "Last Thursday morning, when we discussed the affair over the telephone, you agreed to do precisely that and nothing else. My plans have been made accordingly, and the fact that you have changed your mind doesn't alter matters a particle."
    "Jones!" thundered Mr. Brown, "I defy you to prove--"
    "Hold on!"
    There was something odd about Mr. Jones's voice. Mr. Brown started a little and stared more.
    From the queer machine on the desk across the room, the cover was removed, to reveal an instrument of most unusual appearance. Mr. Jones stepped to his own desk and extracted from a drawer a big spool of fine, shiny wire. He hurried back and slipped it into the machine; he pressed the button and the spool began to spin rapidly; he picked up a pair of telephone receivers and listened for a minute. After which, he smiled slightly and said:
    "If you'll just come over here and listen for a minute--?"
    With an enigmatic grunt, Mr. Brown complied. He took the receivers and held them to his ears. And his face became a study, for he was hearing strange things. For a beginning, he heard his own voice, perfectly suave and even that Thursday morning, asking for Mr. Jones; he heard the replies of the office clerk; he heard Jones's steps approaching the telephone. He heard Jones's first words of the conversation and his own reply in his own voice! His amazed brain absorbed the fact that the whole conversation was being repeated, word for word and in precisely the original tones.
    A little later, he heard "central" announce the end of five minutes, and heard himself ordering her off the wire! He heard himself make the agreement precisely as Jones stated; he heard the click as he rung off! Mr. Brown dropped the receivers with a gasp and stammered:
    "It means that we have a telegraphone hitched on to our telephone here!" Mr. Jones announced. "And it means that every blessed word coming over that wire, which I want to record, goes into that machine and can be reproduced a thousand times--here, in court, or anywhere else. Now, how about that agreement, Brown?"
    Or perhaps it never took place at all. Indeed, it hardly could have taken place, for the telegraphone is not in use as yet among the business public; yet if the little scene above is not duplicated daily within the next few years, it will be only because some transcendently brilliant mind has contrived something superior to the telegraphone. That seems far from likely.
    It is rather a weird instrument, this telegraphone. You see a box of something less than a cubic foot; you see two spools, five or six inches in diameter, filled with hair-like steel wire; you see an ordinary telephone transmitter and a pair of receivers and that is all. The whole affair looks mysterious rather than complicated, and you feel that there is not a great deal to understand about it.
    But the weirdness comes when you listen. The demonstrator, say, has set the "speaking" switch, and you have spoken haphazard words into the transmitter; now the switch goes to "hearing," and you listen. And the words come forth--not after the "scratchy" manner of the phonograph, not with the side noises so often incidental to the telephone, but clearly, distinctly, with a pure, clear-cut, flowing quality difficult to describe, but astounding to hear!
    If even a hint of such an idea as is here embodied can be given in a dozen words, the principle of the telegraphone in operation is as follows: Feeding from one to another of two large spools, some six inches apart, runs a steel wire, 1-100 of an inch in diameter. Midway between the spools, upon an upright arm, are placed two electro-magnets, facing each other and with perhaps one-sixteenth inch of space between them; and in circuit--when the "speaking" or "dictation" switch is on--with the telephone transmitter.
    The wire running between the magnets, a motor sets the spools in rapid revolution. From the transmitter the vibrations of the voice are communicated to the magnet coils. In the infinitesimal instant of passing between the magnets, each tiny section of the hurrying wire has been magnetized, with an intensity and polarity corresponding to the strength of the particular sound-wave entering the instrument at that instant.
    The record completed, the spools are reversed, and the wire rapidly reeled back by turning the switch to "hearing." The receiver is brought into circuit with the magnets, and the wire started forward once more. Magnets and magnetized wire acting as a tiny magneto generator, the coils are electrified to a greater or less degree, as the original sound-waves were strong or weak. The varying vibrations are communicated to the receiver--and the voice is reproduced!
    Rather a simple application of a not unknown principle, perhaps. Doubtless; but it remained for Poulsen, a Danish inventor, to put it into practical application. The fact that sound can be produced by connecting a telephone receiver with an electro-magnet and waving a permanent magnet close to the face of the latter, constitutes an interesting laboratory experiment. The fact that the same phenomenon can be applied to a tiny steel wire, running along at a rate of ten feet per second, that the wire can be magnetized by the vibrations of the voice and the vibrations reproduced by an inversion of the process, brings us face to face with rather a remarkable proposition.
    What are the commercial possibilities of the telegraphone? At present, three stand forth prominently.
    The value of the recording telephone as such can hardly be estimated. Heretofore the telephone, vastly important as it must be considered, has been open to one grave objection: the lack of any permanent record. Within five minutes of its passage over the wire, the message at the mercy of man's fickle memory, lies open to confusion or dispute or utter confutation. Save for the remote possibility of an interested party having switched a third instrument into the circuit and listened to both ends of the conversation, there is nothing whatever to prove or disprove either side of the case. Each end of the wire might swear positively that this or that had not been said--and with equal justice.
    The telegraphone has altered that slightly. Once in action, it gathers not one end of the conversation or the other, but every audible sound which passes over the telephone line! Spinning silently, it forges its invisible chain of magnetic impressions, without an error or a break or the altering of a single inflection of the voice. And when its work is over, it stands ready to deliver you the finished record, to be reproduced on the spot, or a year or a dozen years later!
    The second interesting application comes in the telegraphone as a dictating instrument.
    Our busy man sits alone, with the task of answering his morning letters. Before him stands the telegraphone; at his lips is the transmitter, he talks as he thinks slowly and clearly he has plenty of time. There are two miles of wire to run through that machine and another spool may be inserted in a minute or so when the present one is full! He stops and ponders for five minutes; at the pressure of the switch the instrument stops as well. There is no subdued rustle of skirts, no disturbing tap of the poised and waiting pencil, no pleading to go a trifle slower or to repeat that last sentence again. He is alone with his thoughts, and can concentrate them perfectly in his talk to the whirling little machine.
    Ah! That was a mistake, wasn't it. He should have said Tuesday in the sentence before last, instead of Wednesday. However, it is very easily altered. Our friend merely stops his telegraphone again, runs it back to the spot where error occurred, and starts it forward again; and thereafter talks his revision of the letter into the machine--and proceeds calmly as ever.
    And at about this time the thoughtful reader probably suggests that he has now placed two records on the same length of wire, and that trouble impends. Not at all. As the wire takes the forward motion once again, the electro-magnets of themselves destroy the previous magnetic impressions, eliminating or "wiping off" the former record; and as the instrument works on, in almost the same wee flash of time the wire is cleared of all that went before and is receiving the new record!
    And now the letters are done and ready for the stenographer, in the next room or the next building or the next town. Our business man signals; his aid fastens the receiver over the ear; the typewriter is made ready; and her answer goes back. From the telegraphone, the letters follow one another over the wire and are transcribed; and thus the ordeal of dictation is passed through without stenography, without annoyance, without anything but peace, calm, and utter satisfaction!
    It is all rather easier for the stenographer, too; it seems almost as if the inventor, doubtless an eccentric person, had considered the much-maligned class of shorthand workers to possess some rights. Let us suppose that that last letter was not quite clear. Back goes the telegraphone and repeats it conscientiously, without annoying the original speaker in the slightest degree. And if interruptions come to the typist in the middle of a letter and the telegraphone must be stopped, the obliging instrument runs back for five or six words, and renders the picking-up process perfectly easy when started into action again!
    In the automatic telephone station comes the third and probably most fascinating phase of the telegraphone.
    We may as well return to Mr. Jones, who has the instrument in his office. It is a Saturday afternoon in summer; save for himself, the office is wholly deserted. Even he, while denied a holiday in his own establishment, must spend the afternoon in running around uptown. Meanwhile, several people are likely to call him up on the 'phone.
    Nevertheless, he is not worried. He merely sets his telegraphone in readiness and departs. Presently "central" calls the office. The telegraphone answers with a little tinkling signal of its own! The man at the other end is informed that such is the case and that the conversation must be one-sided. He delivers his message to the telegraphone, and the telegraphone records it. And then, at the end of three minutes, if the talk has not yet ceased, it completes the good work by ringing off automatically and stopping itself! If there is more to be said, the other end will have to call again; if that is all, the telegraphone is ready for the next comer!
    Toward six, Mr. Jones returns. The right-hand spool is almost full, it appears; people have been calling up in some numbers. Mr. Jones sits back in his chair, starts up the instrument, puts the receivers to his ears and listens to the various voices and messages that have been floating into his office since noon!
    That is what one might almost consider a remarkable invention!
    These are things which the telegraphone is actually doing, in its babyhood and before coming into general commercial use. With science, ingenuity, and the demands of modern business behind it, can there be any certain prediction of the extent of the field over which it will spread with the years of development to come? The basic principle, the apparatus itself, are simple, certain facts, of which the above-described adaptions are the first logical offshoots.
    But why not go further and consider for example, the really indestructible record, the record which only a magnet can eliminate; the record of sound which can without injury be pounded with a mallet or dropped out of the window?
    Why not consider the record half an hour long--or two hours, if you like--which delivers without interruption all manner of sounds, which reproduces the voice as clearly as the voice itself, which gives back musical notes in all their original purity? There would seem to be possibilities there.
    And why not consider--but why consider at all? With the telegraphone, the speculations of to-day are very likely to be the facts of to-morrow. We can but wait, and with the reasonable assurance that the wait will not be very long.