The polarization sensitive optical heterodyne methods used to detect polarization rotations in conventional magnetooptic data storage systems can be altered to produce nonzero electronic signals only when the polarization rotation changes. Such systems detect the edges of the magnetic domains optically and produce signals similar to conventional inductive magnetic recording channels. Both theoretical and experimental results indicate that optimized edge detection systems can have a performance comparable with present level detection systems but with less complexity. The maximum carrier-to-noise ratio (CNR) occurs for domains 1.3 jim in length when edge detection is used, and the CNR found experimentally at this maximum is 47 dB, comparable to level detection for this size domain. © 1991 Optical Society of America.