September 2016

Q&A Discussion With Owen Kwon, President, Astell&Kern
And Marc Finer, Senior Director, DEG: The Digital Entertainment Group
About High Resolution Audio

  We all know that the world of recorded music is always changing. High resolution audio has already penetrated the audiophile marketplace. Now it's the mass market's turn. In order to bring everyone who loves music up-to-date on the status of high resolution audio, we turned to the ultimate sources – Owen Kwon, President of Astell&Kern, the global leader in high resolution portable and home audio playback devices and Marc Finer, Senior Director, DEG: The Digital Entertainment Group. For nearly 20-years, the association has advocated and promoted entertainment platforms, products, and distribution channels which support the movie, television, music, consumer and IT industries.

Q. Why is high resolution music so important today?

Owen Kwon: High resolution audio is important in the world of music today because it captures more details of a song than any other type of compressed (or lossy) digital audio formats. This is true whether the original source comes from a live performance or a studio recording. Most of the music that we listen to today, like CDs or MP3s, have inferior or compressed sound since that was the most convenient format available at the time. These formats sacrifice true studio quality sound for portability and the convenience of carrying thousands of songs on the go. With advances in storage prices and high speed Internet readily available, people do not have to sacrifice sound quality for convenience anymore. Those lossy formats do not provide the full dynamic range captured from the original performance. High resolution audio provides the full sound quality. Most people consider high resolution audio better than CD quality sound. 

Marc Finer, Senior Director, The DEG

Marc Finer: High resolution digital audio is the closest thing to the original studio sound. It's the way the artist, producer, and engineer always intended their music to be heard.

If you look back over the last 40 years, the music industry transitioned from vinyl to cassettes to compact discs, due to the demand for more portability and better sound. Then in the early 2000s, the industry pivoted once again by introducing digital delivery in the form of MP3s. However, in order to be small enough for downloading to PCs and portable devices, these files needed to be compressed, which compromised their music quality. High-resolution audio is uncompressed (or "lossless") and delivers sound quality that's better than not just MP3s but CDs as well, which has the potential to transform the audio industry.

Q. Can the average person hear the difference?

Marc Finer: Those people who truly love music want the best experience possible. This includes audiophiles who can hear the difference with hi-res immediately. There's also a growing group of millennial enthusiasts, who are seeking better sound and are fixated on everything related to a better music experience. They're the same people who spend thousands of dollars going to concerts, festivals and clubs. And they're even buying vinyl, in order to connect more emotionally to their music. According to the latest research conducted by the Consumer Technology Association (CTA), both of these consumer segments want to experience music as if they're in the studio with their favorite artist and band.

Owen Kwon: Yes they can. However, they need quality portable devices that can properly play back high resolution digital music, such as our Astell&Kern portable hi-res audio players. There is a noticeable difference in listening to a song in MP3 format, then in a high resolution format. The music consumes you; you hear things you've never heard before in a song that you've listened to for years. You start to notice some simmering resonances of a sound stage, the subtle sound of instruments at lower volumes, or the hint of a singer's breath – then all of a sudden you hear the strings, the woods, and the keys on a piano. It's different with each new song. There's always a new surprise. It's quite an exciting experience as you feel the artists and the band suddenly appear in front of you.

Anyone who loves music would appreciate high-resolution music the most. The demographic is ageless. We are seeing millennias really embracing the idea of getting the best sound possible. Good quality music brings people great pleasure. It impacts our mood in the most positive and comforting ways. Music is linked to so many experiences in our lives.

Q. What is the status of the music market?

Marc Finer: The latest research from the music labels and organizations like the Recording Industry Association of America (RIAA) and Music Watch shows that the digital download market is starting to decline. This is being replaced by a new generation of on-demand subscription services from companies like Spotify, Apple, Amazon and others. Of the nearly 150 million consumers who are streaming music in the U.S. today, an estimated 25 million are passionate about sound quality and the user experience. This is not merely a small group of audiophiles – it's a major market opportunity!

Owen Kwon, President, Astell&Kern

Owen Kwon: At Astell&Kern, we see that the online hi-res music download services such as HDtracks and Pro Studio Masters are promoting their high resolution offerings. These are just two of the many hi-res music download sites that are available to consumers.

Actually, IRIVER, the parent company of Astell&Kern is partnering with music labels in Asia to release high-resolution audio on microSD cards so people can have all of the liner notes associated with traditional physical forms of media such as vinyl and CDs, and own a copy of the album they have purchased, in high resolution FLAC format. Here in the United States, we have released special edition high resolution box sets with both Universal Music celebrating Blue Note Records 75^th anniversary and with Warner Music, providing the full catalog of Maria Callas in a special edition high resolution collector's box set.

Q. How strong is the female market?

Owen Kwon: Our research shows that high-resolution audio and Astell&Kern products have been pretty strong with male listeners 25 years old and older.  In the last year or two, we are starting to see an increasing number of females interested in better, higher quality music, because there are so many tracks written for them. Women understand the emotional connection to music and in recent years have been embracing new technology much faster than other demographics.

Marc Finer: Music fans are gender agnostic. Many women are also very passionate about music and more and more are attending concerts, festivals and clubs to hear their favorite artist perform live. Additionally thanks to social media, these women are able to connect to their favorite artists on-line, which explains the huge following enjoyed by such superstars as Adele and Taylor Swift. As a result, our industry has a whole new opportunity to market a new premium music experience that includes high-resolution studio sound and more advanced user features. It's very exciting.

Q. There are some industry people who think that high resolution music has not met sales expectations. What is your reaction to that?

Marc Finer: That's simply incorrect - the opportunity is greater than ever. In fact, the only part of the digital download business that's actually growing is high resolution. It's increasing in both the number of compatible devices being sold and music industry revenue. And once hi-res transitions to subscription streaming services, this growth will continue exponentially.

Owen Kwon: Every new technology takes time to build up. They said the same thing about the television set, the car stereo, and the Walkman. We see evidence that this new music experience is penetrating the marketplace. We get calls every day from new retailers who want to be a part of it. We are very encouraged because we know there is a huge market that hasn't awaken yet. We have seen the happy smiles from our customers that listen to it for the first time. They are never going back to compressed music. As long as the high resolution music selections continue to increase, so will hardware sales. The music catalog of hi-res audio tracks available is small compared to what's available on streaming services at the moment. However, most of the hi-res music tracks available now for purchase are best-selling or legendary albums, so it covers a fairly large portion of music demand. More hi-res music is becoming available every day. The whole industry is working together to build up this segment of the music business.

Q. What are traditional retailers doing to promote high resolution music?

Marc Finer: With hi-res audio, demonstration is everything. So a number of dealers are working closely with manufacturers like Astell&Kern and Sony to bring studio quality sound to the retail floor. The best example of this is the biggest retailer in our industry Best Buy, who recently launched a Hi-Res Listening Station program in their Magnolia Design Center stores nationwide. This kiosk features hi-res clips of both new releases and classic albums, which are updated regularly by the major music companies working in cooperation with the DEG. This same approach is being followed, on a smaller basis, by many leading independent retailers around the country.

Owen Kwon: Consumer Electronics retailers are opening up their stores and offering more options to shoppers, as they see a big wave of new opportunity is coming. The product categories they relied on in the past for sales are slowing down. We are relying on the DEG to help educate the industry and the market. The DEG has been monumental in bringing together all of the players in the industry and getting everyone to work together towards the common goal of providing listeners with the best possible sound quality available. The DEG has made great strides in educating everyone about high resolution audio and we are extremely grateful for all of their work. At the end of the day, it's all about the music. We are seeing good results. It's working.

Q. What about Apple?  Will we see high resolution audio from them soon?

Marc Finer: While Apple has yet to launch a high-res music service, they have been assembling these recordings, as part of their Mastered for iTunes program with the major music companies. This is a very important development and over time Apple could become a major provider of hi-res music.

Owen Kwon: Apple has been building an extensive library of 24-bit high resolution audio for years. While there have not been any offerings from them yet, they do have the possibility of jumping into the marketplace at any time. Currently they are focusing more on their streaming service, Apple Music, and will probably continue to do so for the foreseeable future. Astell&Kern has been focused on providing the best high resolution audio experience from day one to music lovers everywhere and will continue to so regardless of who joins us in the marketplace.

The Digital Entertainment Group

Astell&Kern