“Up to this point, if you were to summarise the industry’s marketing message around hi-res music, it’s ‘will you pay more for better sound quality?’ That’s a losing marketing message.”
This may not be a surprising thing to say, until you realise who’s saying it: Mike Jbara, chief executive of MQA, the British technology company that’s been playing a big role in the music industry’s drive to establish ‘hi-res music’ in the minds of listeners.
MQA’s technology is being used already by streaming service Tidal, as well as in audio hardware from companies including Sony, Pioneer and Onkyo, and in smartphones from LG and Essential among other companies.
Jbara thinks there’s still plenty of work to do explaining hi-res music to fans though. “Many of the mainstream, mass-consumers you’re trying to message that to don’t know that the digital sound they’re getting from their streaming service is significantly degraded from what they would have listened to on a CD,” Jbara tells Music Ally.
“So we’re throwing something at them which is kinda orthogonal. We’ve got to first explain to them the context of that. And this has to come from artists, or else we’ll look like the same old music industry trying to sell the catalogue to them again.”
It’s fair to wonder whether progress in this area has stalled since the CES show in January 2017, when major labels, technology companies (including MQA) and streaming services made a big noise around the ‘Hi-Res Audio Pavilion’ at the Las Vegas tech-fest.
Jbara describes the process since as careful “choreography” with a cast of interlocking participants: building playback technology to get a streaming service excited, which in turn persuades a consumer-electronics brand to commit to the technology, and so on. Not to mention music listeners.
“There continues to be a long-term education component, talking to people about what ‘high-quality’ is, whether that’s the mainstream market of a certain age who used to think of CD as the quality standard, or the younger age group who look at you funny when you mention a CD, and think they’re getting enough quality with streaming,” he says.
“But when I think about that education and understanding, one reason we’re so optimistic is that we think the volume of the conversation that’s the result of people talking about hi-res is at its highest level, across every category.”
What are the key arguments for hi-res music in 2018? For the streaming services, an ever-more-competitive environment may be one reason to do more around sound quality, with Jbara suggesting that one side-effect of the emergence of voice-controlled smart-speakers may be more thought about churn – listeners ditching one streaming service for another.
“I’m not necessarily interested when I say ‘Alexa, play me this song’ about what service brings that music to me. I just want the answer to my question,” he says.
“So will streaming services need to differentiate by other characteristics other than brand name? Also, what flexibility will there be for consumers to take their collections across services. Will metadata travel with us around our playlists, or will we trust the curation of those services: that their AI systems won’t take long to figure out what I like to listen to?”
“It should become easier for people to move across services, so they should be advocating that kind of service differentiation (such as hi-res). And the easiest bit of that is the marketing: ‘Here’s the best version of every song that you love’.”
Jbara’s dislike of the alternative marketing message ‘will you pay more for better sound quality?’ doesn’t mean he thinks hi-res should be a no-cost addition to the current set of streaming services, however. In fact, he thinks the industry faces a race against time to establish hi-res as worth paying extra for – even if that’s not how the marketing pitches it.
“From the history of digital music, when it becomes less expensive or absolutely economically indifferent about the cost of serving better quality versus lower quality – that it’s not only going to be experience, it’s going to be standard – then the opportunity to build premium into its brand identity will be lost,” says Jbara.
“I experienced it on the labels side: they missed an opportunity to get a premium for their artists every time iTunes came back and said ‘we’re going to upgrade the experience’ [in terms of the audio quality of downloads]. Every time the quality was upgraded, the same economics went back to the labels and artists.”
“If we don’t get back to a place where we have a premium product for the fans that want it, there won’t be an opportunity to continue to iterate and evolve and innovate around both premium and standard… When Spotify or Apple say ‘we’re about to double the quality of everything we do in streaming’ it seems as though it’s going to be very hard for labels to have any leverage in that discussion. History suggests they haven’t been successful in the past at doing that, in the download era.”
Jbara also warns labels not to see the current generation of streaming services as “the be-all and end-all”, pointing out that 2017’s global recorded-music revenues of $17.3bn were still a long way short of the $25.2bn market in 1999, at the peak of the CD era.
“We’re in danger of treating over-performance on really depressing forecasts as a win! It’s like saying the wheel is the height of the transportation industry. Yes, that was great and we’re getting a lot of credibility. But what are we doing next?” he says.
That isn’t just a pitch for higher-quality audio. Jbara is keen for the concept of hi-res music to include richer metadata, better interfaces and more information around the music.
He cites startup Roon Labs – which like MQA was a spin-off from audio firm Meridian – as one example that has impressed him in that regard, and suggests that the music industry must redouble its efforts to think about what listeners want – and how best to evolve streaming services and their interfaces to deliver it.
“That’s not the core competency of A&R-centred music companies. We’re an audio-technology company, so it’s not ours either,” he says. “We need more of us in the value chain spending more time thinking about the consumer first, and pulling together all the partners to configure that experience.”
“We can’t sit back. Look at what games and film and television are doing. As the [digital entertainment] pipe gets bigger, music’s share of that overall pipe is going to get smaller if we’re competing against better innovators.”
Jbara thinks labels can play an important role in fostering the innovation to head off that threat, and calls for a ‘business architecture’ that will “make it easier for them to say yes” to new startups, business models and forms of music consumption, even if that’s on an experimental basis.
He’s also intrigued by the industry debate around ‘user-centric’ streaming compensation: the idea that the royalties deriving from an individual streaming subscriber’s monthly payment will be divided among the artists they listen to, rather than going into a larger pool to be distributed according to share of streams on the entire platform.
“If we could start to connect subscribers’ consumption habits [with payouts] that could fuel this innovation around smaller, more segmented, more curated innovation services. But we need to figure out the wholesale economics. If someone’s going to be just streaming jazz, classical or German Schlager music, they’re probably not going to be in the ten-bucks-a-month zone,” says Jbara.
Getting back to hi-res music and MQA’s prospects within it, Jbara is keen to stress that any sense of slow progress so far belies the potential for real movement in the future.
“The words patience and time are what come to mind for me. I have no doubt – see Moore’s Law – that this is going to happen. The disappointment we would all have in the future is if we lose this opportunity to present a better product to the market in a way that gets consumers and the industry to understand that consumers really do value music,” he says. “Not just that services can do it at no incremental cost.”
Jbara says that MQA specifically is seeing some encouraging signs from the automotive industry, describing the last few months as “blistering” in terms of the number of RFPs [requests for proposals] from car manufacturers reaching his desk.
“We won’t see any commercial impact on our revenue for a couple of years yet, but what’s neat is that a lot of the big music services have been having conversations with the big car companies for a while now, and when they start to hear [from the car companies] ‘we’ve made a choice: we’re going hi-res with MQA’ that has a near-term impact for us in terms of business-development value,” he says.
“The automotive thing is happening more quickly than we expected though: as much as we need to be patient with manufacturers who are saying ‘yes, that’s the right approach for three years from now?’, what can we do right now? What can we do off the phone soon, while we get the longer-term best-possible platform?”
“In the long term we’ll have the actual chip running in the vehicle, but how can we get a good hi-res experience now with someone sitting in the car and having the right app, and being able to cast or connect?”
In the meantime, MQA is rolling out new technologies. MQA Live was first shown off at the SXSW conference earlier this year, including a real-time encoder that connects to a venue’s sound system, then can stream high-quality audio to fans, in a bandwidth-friendly way. Jbara says there are already a couple of partners for the technology.
“We’re in the early phase of the commercial rollout: both partners are taking licences to MQA’s live technology, who want to go and source shows from some of the iconic nightclubs and destinations around the world,” he says.
“We’re going to build platforms for those brands where the audio experience is powered by MQA coming out of that venue. ‘Dial up a show tonight and listen to it live’. That’s one of the models, but another might be upselling as part of ticket sales: the idea of being able to sell a fan [audio-streaming access to] an additional night from that tour, maybe in another city.”
Broadcast is the third part of the MQA Live strategy, with Jbara saying MQA had expected to start focusing on this in 2019, but that it has already had incoming interest from broadcasters to test out the technology.
Live, cars and the steady choreography of the dance of new hi-res music partners are all fuelling Jbara’s optimism for the future.
“We’re not going to stop pushing on this concept of accelerating innovation around experience. The frameworks we’re using for 2018 and 2019’s conversations are not just ‘MQA, look at us, we sound amazing’ but rather how can we be a catalyst in this move towards better experiences for consumers?” he says, before returning to the marketing challenge.
“Sound quality alone won’t be it. A one-note conversation with the consumer about ‘would you pay for more sound?’ is just not going to win.”