Sony, Labels See High-Res Audio As Reversing Recorded Music’s Declines

SAN DIEGO -- The stakes are high for high-res audio in the U.S. to help reverse a declining music download market, industry executives said at a Sony high-res audio event. Music downloads slipped by 2 percent from 2012 to 2013, and worldwide downloads decreased by 4 percent year-over-year, said Jim Belcher, technology and production vice president at Universal Music Group.

"The real challenge right now is to get the mindset of people who are digitally connected -- who are the future of our business -- understanding that there’s a better experience digitally than there is through compressed files,” said Marc Finer, senior director of the Digital Entertainment Group (DEG). The fact that part of the younger audience has shown an interest in vinyl over the past few years is a positive sign, said Aaron Levine, product manager at Sony. “They chased after it” because they weren’t aware of a digital alternative to compressed music, he said.

The drop in music downloads parallels an overall decline in global recorded music revenue, which was at $25.32 billion in 1997 and dropped to $15.03 billion last year, according to International Federation of the Phonographic Industry data, Belcher said. Universal is banking on a slow turnaround in audio streaming downloads and premium services, Belcher said, and better-sounding music is part of that strategy. Universal says it offers “several hundred” high-res audio titles, which Sony, CEA, major labels and other industry supporters define as “anything better than CD.”

While physical media sales remain strong in countries including France and Japan -- and there’s a resurgent, if niche, market for LPs in the U.S. -- the digital download market is “maturing” in the U.S. and that concerns everyone in the music chain, several executives said.

Sony, CEA, and music labels Sony, Universal and Warner have taken a leadership role with the high-res audio initiative and are targeting the youth market as the future of the medium. Some 50 companies expressed support for the effort at CES in January, but for Sony, which lost its leading role in portable audio to Apple at the dawn of digital music, stakes are particularly high. The company will launch a new series of entry-level high-res audio products Thursday, it said.

In promoting the high-res audio message, Jeff Hiatt, director-home audio, Sony home entertainment and sound group, cited the decline in CD sales in the U.S. and Sony’s belief that future growth in the audio market will come from streaming and subscription services. High-res audio, Sony hopes, will help renew consumer interest in buying music and the equipment to play it on. Sony hopes to find new revenue opportunities for its own Direct Stream Digital (DSD) coding technology that was at the core of the vanished Super Audio CD format.

One journalist quoted comments by Gilad Tiefenbrun, managing director of high-end audio company Linn Products, at a recent company event in San Francisco, in which Tiefenbrun said, “there’s no need for DSD.” The comments brought back the kind of high-end versus major CE company clashes that existed in the heyday of the compact disc. Linn, which also has a stake in the advancement of high-res audio, has its own high-end PCM-based server, and Tiefenbrun has argued that for the music industry to thrive, it needs a universal, open format -- PCM audio -- that allows all music to be recorded in the highest quality and played back on any hi-fi equipment. The journalist asked Sony executives to respond to those in the high-end audio industry like Tiefenbrun who say Sony’s high-res audio initiative is all about trying to cash in on DSD throughout the chain from recording to playback.

Belcher of Universal intervened, saying his label is “format-agnostic,” and Levine of Sony quickly said, “so is Sony.” Hiatt called those kinds of comparisons of which coding technology is superior “subjective.” Some of Sony’s products have DSD along with 192/24-bit, PCM, WAV, FLAC, ATRAC and ALAC decoding. “It’s not up to us,” Levine said, regarding which coding techniques artists and recording engineers choose to best represent the sound when recording an album. “It’s up to us to play it back,” he said. “If they choose DSD, great; if they choose PCM, fantastic,” he said. Hiatt said Sony is providing all the decoding technologies in its high-res products. “Let the consumer ultimately decide,” he said.

While Universal maintains a format-agnostic approach, Belcher also pointed out that Universal has high-end audio retailers that specifically request DSD recordings. “They ask us for DSD because their customers are asking for DSD,” Belcher said.

Format transition issues “are always confrontational” and are nothing new to the music industry, said DEG’s Finer. Finer cited Dolby and DTS battles over the years “where you were forced to take stands” on which codec worked best sonically and was easier to implement. Eventually, “whether it’s lossy or lossless, most of the architecture in the products can decode everything,” he said. That happens at a chip level from component makers including Burr-Brown and Texas Instruments, so arguments about which format is better “are going to be moot,” he said. “It’s the music creator’s decision; the hardware should become transparent in the process,” he said.

That’s the harmonious message the high-res audio initiative backers are hoping will carry forward. Hiatt said the last thing Sony wants is a “format war related to DSD, PCM” or any of the formats. “It’s about high-resolution music,” Levine added. “It’s about putting back the artistry that was taken away with compression,” he said.

While Sony’s next generation of audio products promise to address cost obstacles to the advancement of high-res audio, content and the cost of content remain an issue. The high-res titles Universal offers typically go for $20 and up, Belcher said. Much of the content from niche audiophile high-res audio labels including Acoustic Sounds, HD Tracks and Chesky Records is esoteric. Belcher said Universal is concentrated now on “new releases” such as Daft Punk’s Get Lucky that will attract the type of younger music enthusiasts that are necessary to make high-res audio succeed.

Getting the volume music retailers -- Apple, Amazon and Google -- is a critical part of having high-res audio expand beyond a niche segment. On whether any of the big three are behind the Sony-led high-res audio movement, Levine said, “We'll let the industry handle that.” Finer said if enough of the high-res audio initiative comes together, “then it’s bound to start to impact other providers of music and other platforms that deliver music.” That takes time, he said. Hiatt said conversations are in the works about what needs to happen on the content side to take high-res audio to the next step.

Belcher cited Apple’s Mastered for iTunes program that requires publishers to provide 24-bit ALAC tracks with high sampling rates to boost sound quality when music is transcoded to the lossy AAC format available on iTunes. Although it’s compressed audio, it is an initiative toward higher quality audio, he said. “They are aware of the desire for higher quality audio,” he said. Meanwhile, Apple Insider posted a report earlier this month by blogger Robert Hutton claiming Apple will launch high-res audio sales in less than two months to coincide with the release of three Led Zeppelin remasters. Hutton said high-res tracks would carry a dollar surcharge. Apple didn’t immediately respond to questions.