A new design approach is presented for developing low cost multi-function Magneto-Optical Micro-Disk subsystems. The Modified Gilbert Model is proposed to describe statistically the measured error occurrence in the optically reproduced signal. It considers the dimensional characteristics of media defects by analyzing the reproduced signal and data errors. Using this analysis, a defect proof scheme is proposed which employs on-the-fly sector back-up area. Design concepts for 90 mm class optical micro disk subsystem are discussed briefly and a prototype is described.