Here is one account:

Sony had initially preferred a smaller diameter, but soon after the beginning of the collaboration started to argue vehemently for a diameter of 120mm. Sony’s argument was simple and compelling: to maximize the consumer appear of a switch to the new technology, any major piece of music needed to fit on a single CD…Beethoven’s Ninth Symphony was quickly identified as the point of reference — according to some accounts, it was the favorite piece of Sony vice-president Norio Ohga’s wife. And thorough research identified the 1951 recording by the orchestra of the Bayreuther Festspiele under Wilhelm Furtwängler, at seventy-four minutes, as the slowest performance of the Ninth Symphony on record. And so, according to the official history, Sony and Philips top executives agreed in their May 1980 meeting that “a diameter of 12 centimeters was required for this playing time.”

That is from the new and interesting book by Tim Büthe and Walter Mattli, The New Global Rulers: The Privatization of Regulation in the World Economy, the book’s home page, with free chapter one, is here. Speaking of which, Garth Saloner is another very good South African economist and he is now Dean of Stanford Business School.