Early binaural headphone studies localized sounds inside the head rather than externally.

Evidence

The investigation used headphones, so that sounds to the two ears could be independently manipulated. Sounds were localized within the head, not externalized, but this was regarded as the beginning of a sequence of elaborations leading ultimately to listening in normally reflective rooms. — Toole, Floyd E, Sound reproduction- the acoustics and…, 63

Categorization

• XREF: This is the foundational in-head vs externalized localization distinction that the book’s later chapters on loudspeakers and rooms will develop. — connects to: Headphones sound ‘in the head’ because they fail to model head movement cues — David M. Howard, Jamie Angus, Acoustics and Psychoacoustics, 735