By the early 1990s, when alternative rock began to experience broad mainstream success, R.E.M. was viewed by subsequent acts such as Nirvana and Pavement as a pioneer of the genre. The band then released its two most commercially successful albums, Out of Time (1991) and Automatic for the People (1992), which veered from the band's established sound and catapulted it to international fame. R.E.M.'s 1994 release, Monster, was a return to a more rock-oriented sound, but still continued its run of success. The band began its first tour in six years to support the album; the tour was marred by medical emergencies suffered by three of the band members.
In 1996, R.E.M. re-signed with Warner Bros. for a reported US$80 million, at the time the most expensive recording contract in history. Its 1996 release, New Adventures in Hi-Fi, though critically acclaimed, fared worse commercially than its predecessors. The following year, Bill Berry left the band, while Stipe, Buck, and Mills continued the group as a trio. Through some changes in musical style, the band continued its career into the next decade with mixed critical and commercial success, despite having sold more than 85 million albums worldwide and becoming one of the world's best-selling music artists of all time. In 2007, the band was inducted into the Rock and Roll Hall of Fame, in their first year of eligibility. R.E.M. disbanded amicably in September 2011, announcing the split on its website.
In January 1980, Michael Stipe met Peter Buck in Wuxtry Records, the Athens record store where Buck worked. The pair discovered that they shared similar tastes in music, particularly in punk rock and protopunk artists like Patti Smith, Television, and the Velvet Underground. Stipe said, "It turns out that I was buying all the records that was saving for himself." Through mutual friend Kathleen O'Brien, Stipe and Buck then met fellow University of Georgia students Mike Mills and Bill Berry, who had played music together since high school and lived together in Georgia. The quartet agreed to collaborate on several songs; Stipe later commented that "there was never any grand plan behind any of it". Their still-unnamed band spent a few months rehearsing in a deconsecrated Episcopal church in Athens, and played its first show on April 5, 1980, supporting The Side Effects at O'Brien's birthday party held in the same church, performing a mix of originals and 1960s and 1970s covers. After considering names like Twisted Kites, Cans of Piss, and Negro Eyes, the band settled on "R.E.M." (which is an acronym for rapid eye movement, the dream stage of sleep), which Stipe selected at random from a dictionary.
The band members eventually dropped out of school to focus on their developing group. They found a manager in Jefferson Holt, a record store clerk who was so impressed by an R.E.M. performance in his hometown of Chapel Hill, North Carolina, that he moved to Athens. R.E.M.'s success was almost immediate in Athens and surrounding areas; the band drew progressively larger crowds for shows, which caused some resentment in the Athens music scene. Over the next year and a half, R.E.M. toured throughout the Southern United States. Touring was arduous because a touring circuit for alternative rock bands did not then exist. The group toured in an old blue van driven by Holt, and lived on a food allowance of $2 each per day.
During April 1981, R.E.M. recorded its first single, "Radio Free Europe", at producer Mitch Easter's Drive-In Studios in Winston-Salem, North Carolina. Initially distributing it as a four-track demo tape to clubs, record labels and magazines, the single was released in July 1981 on the local independent record label Hib-Tone with an initial pressing of 1,000 copies—600 of which were sent out as promotional copies. The single quickly sold out, and another 6,000 copies were pressed due to popular demand, despite the original pressing leaving off the record label's contact details. Despite its limited pressing, the single garnered critical acclaim, and was listed as one of the ten best singles of the year by The New York Times.
R.E.M. recorded the Chronic Town EP with Mitch Easter in October 1981, and planned to release it on a new indie label named Dasht Hopes. However, I.R.S. Records acquired a demo of the band's first recording session with Easter that had been circulating for months. The band turned down the advances of major label RCA Records in favor of I.R.S., with whom it signed a contract in May 1982. I.R.S. released Chronic Town that August as its first American release. A positive review of the EP by NME praised the songs' auras of mystery, and concluded, "R.E.M. ring true, and it's great to hear something as unforced and cunning as this."
I.R.S. first paired R.E.M. with producer Stephen Hague to record its debut album. Hague's emphasis on technical perfection left the band unsatisfied, and the band members asked the label to let them record with Easter. I.R.S. agreed to a "tryout" session, allowing the band to return to North Carolina and record the song "Pilgrimage" with Easter and producing partner Don Dixon. After hearing the track, I.R.S. permitted the group to record the album with Dixon and Easter. Because of its bad experience with Hague, the band recorded the album via a process of negation, refusing to incorporate rock music clichés such as guitar solos or then-popular synthesizers, in order to give its music a timeless feel. The completed album, Murmur, was greeted with critical acclaim upon its release in 1983, with Rolling Stone listing the album as its record of the year. The album reached number 36 on the Billboard album chart. A re-recorded version of "Radio Free Europe" was the album's lead single and reached number 78 on the Billboard singles chart in 1983. Despite the acclaim awarded the album, Murmur sold only about 200,000 copies, which I.R.S.'s Jay Boberg felt was below expectations.