Universal Music Group has signed a multi-year partnership with MQA, which will see the label group encoding its catalogue using the latter’s technology for ‘Hi-Res Audio’ streaming.

It’s the second major-label deal for MQA following its agreement with Warner Music Group in April 2016. Tidal became the first music-streaming service to adopt MQA’s tech in January 2017.

It won’t be the last, according to Michael Nash, executive vice president of digital strategy at UMG. Talking to Music Ally ahead of the MQA announcement, he outlined the label group’s expectations.

“We are focused of preparing tens of thousands – and ultimately hundreds of thousands – of tracks to have them available for services,” said Nash.

“We don’t want to step across announcements that other companies will make, but we think that we could safely guide you in the expectation that there will probably be half a dozen services in the marketplace by the end of the year delivering this format.”

Nash declined to elaborate, although in a press release about hi-res streaming issued by the Digital Entertainment Group – backed by UMG and other labels – included promises from Napster, Pandora and HD Tracks.

It is thus safe to consider them as three of the half a dozen services that Nash anticipates will be offering hi-res streaming by the end of 2016, although that does not necessarily mean they will choose MQA’s technology.

MQA UMG logos

2017 is set to see a big push from the music industry and its technology partners for higher-quality streaming, but it’s not the first time ‘hi-res’ has been pushed.

In the physical era there was the DVD-Audio versus SACD format war – a war that managed to end with both sides as losers – while we have also seen ‘lossless’ files quietly become more common in the downloads era, while remaining a niche.

The new wave of hi-res streaming activity was anticipated by Tidal’s HiFi tier (originally launched when it was the Jay Z-less WiMP service in Scandinavia), as well as by French hybrid streaming and downloads service Qobuz.

Nash thinks the lessons of the past – particularly the DVD-Audio / SACD battle – have been learned.

“One of the things I was most pleased about when we were at CES was that it felt to me like this was unique, in that the various music companies and a number of players in the [tech] ecosystem were coming together around support of high-resolution audio,” he said.

That really deviated from the past, where different companies aligned with different competitive formats, and there was some degree of confusion in the consumer electronics space around which format was going to win, and which was going to enjoy the support of rightsholders.”

The result: one big reason why a lot of people didn’t buy a DVD-Audio or SACD player was because they weren’t sure which would be the VHS and which would be the Betamax. Meanwhile, one big frustration for those who did choose a side was the unavailability of some albums that were only available for the other.

Now, Nash thinks the landscape is more positive. “We’re at a point now with high-resolution streaming and with MQA enabling that with their technology, that this is the beginning of a new era in the evolution of the conversation around quality,” he said.

“With digital over the last couple of decades – and you can look at it starting with the CD – the focus of the evolution of [music-playing] technology has been around convenience and portability. And you can make the argument that the casualty of that focus has been quality.”

“As a company sitting on top of millions of copyrights, with our artists working so hard in the studio to capture all the sound information to deliver incredible experiences for their fans, it’s time that we focus the technology-evolution conversation on delivering quality. But it feels like we’re doing that in a way where we’ve learned from the past. We’re not in format wars: we’re addressing the marketplace.”

Nash praised MQA’s management team for having gone about their business courting rightsholders, hardware firms and digital music services “in a very thoughtful way”, adding that “they have focused on the right things” to pitch their technology.

That still leaves plenty of hard work ahead to similarly win over music fans, particularly outside the audiophile world. Nash is optimistic that hi-res streaming will be more than a niche.

“We believe that as technology advances, the capability to deliver this level of audio quality is going to become more of a standard expectation of audio services. How long that will take, obviously is the subject of reflection and debate,” he said.

“We believe that it’s important to educate the marketplace, and to focus on activating consumers around the value proposition of quality. I use the analogy of wine. If you didn’t talk to consumers about Grand cru, everybody would drink wine out of a box.”

Nash suggested that artists will play a key role in this education drive, as will hardware firms, from hi-fi manufacturers to smartphone makers.

“Ultimately consumers will have this expectation, and there will be no reason to have lower-quality formats. The network capability’s going to be there, the consumer hardware’s going to be there, and we think there will be a marketplace expectation around this,” said Nash.

“Convenience and portability took the early lead in the impact of technology in the transformation of music through digital, but I think the quality is going to catch up over time.”

YouTube video

For Tidal, higher-quality streams have been presented as a higher-value subscription: Tidal HiFi and its new ‘Masters’ feature costs $19.99 a month compared to the $9.99 standard subscription.

Will that be the same for other streaming services adding hi-res options in the coming months? Nash stressed that pricing will be up to those individual retailers, but said that research conducted by UMG has indicated that music fans do see the value in higher-quality audio.

Specifically, results from a 1,000-person nationally-representative survey conducted by UMG in the US – and shared with Music Ally – found that 85% said that audio quality was “very important” when listening to music. 48% agreed with the statement ‘I am willing to pay more money for better audio quality’, rising to 62% for 25-34 year-olds.

When UMG presented respondents with a list of possible additional features for premium music-streaming services, “studio quality sound” was the most popular, appealing to 44% of them. Meanwhile, 71% of existing streaming subscribers said they were interested in getting this feature.

Nash said this has sharpened Universal’s focus on supporting hi-res streaming’s path to market, but also said that if even a relatively small number of music fans initially see this feature as worth paying more for, it could be meaningful for the industry.

“We’ve seen the Pareto principle – the 80/20 rule – for a while, where 15% to 20% of our consumers generate more than two thirds of the revenue associated with sound recordings,” said Nash.

Even if this is something that would appeal to a smaller niche by the percentage of the music-listening population, by percentage of total revenue it could be quite significant.”

However, Nash was also keen to talk about the significance of hi-res in terms of the music itself, telling Music Ally that one of his personal eureka moments around the technology came when Universal’s technology team set up a demo, listening to a vintage Frank Sinatra live recording from Capitol Studios in the late 1950s.

The demonstration began with the original recording before moving through the vinyl, cassette, CD and other-format versions of the recording. Nash said that little details, like the swish of a steel brush on the snare drum, were lost as the formats advanced, and new compression techniques came into play.

“It’s this realisation: that sound information is gone, it has been dropped out of subsequent products. How much other sound information am I not getting?” he said, suggesting that if labels and their partners can help music fans realise this, that will fuel their desire for better quality.

The market is ready, most consumers care, and even if it is a smaller niche that might gravitate towards the quality and perhaps at a higher price point, that could still move the market from an economics perspective,” Nash added.

For now, UMG is getting on with the task of encoding its catalogue in MQA’s technology, starting with thousands of tracks, then tens of thousands and ultimately hundreds of thousands of recordings, as per the quote at the start of this piece.

“We’re focused both on the gems of our catalogue, and also on our most important frontline releases. We are not just looking at this as a back catalogue marketing and distribution strategy,” said Nash – another important difference to past attempts at hi-res audio technology.

And definitely no format wars this time round? One scenario is that every streaming service and hardware maker adopts MQA, as does every label. Yet it’s also possible to imagine another scenario: for example where Apple Music does its own thing, or other technology providers emerge to compete with MQA.

“MQA is in an important place, and they’re moving the conversation forwards in a very significant way. Technology advances – we understand that from our history in this business! This ongoing rate of technological change is going to keep producing innovations. MQA could be a company that continues to innovate, and other companies will innovate too,” said Nash.

“The nice thing about hi-res streaming is that a lot of this winds up for the consumer not being a point of confusion or deliberation. You can update the format that the catalogue is delivered in, if the ecosystem is evolving around new standards and new technology… You get away from some of the elements of consumer confusion where they have to pick one end-to-end solution or another end-to-end solution.”

“MQA have innovated: they have a solution and they have aligned the partnerships. They are in a very important frontrunning position here, but they will need to continue to innovate,” continued Nash.

“We think there will be competition that is healthy, but it’s less for the consumer trying to pick one format or another format. We want the choice to be about the consumer gravitating towards higher quality, without having to pick all the interlocking parts of that.”

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