Is High-Fidelity Sound the Future of Streaming Music?

As Tidal and Deezer enter the U.S., will they find an untapped market or disinterested fans?

Deezer Credit: Courtesy Deezer

As music shifted from CDs to downloads, and fans downsized from huge speakers to earbuds, sound quality devolved, as Neil Young said, into "a little above a Fisher-Price level — it's a toy stove." That's even more true with streaming — Spotify, YouTube and the rest mostly provide super-compressed audio files with tinny sound. But some streaming companies are taking up Young's cause. "High-fidelity sound quality is truly a natural evolution of the market," says Andy Chen, chief executive of Tidal, a Norwegian service set to expand to the U.S. "Music is probably the only entertainment-content format in which people have accepted lower quality than 10 years ago — we're saying that maybe that's not OK. Shouldn't it be the same level it used to be? Why should we accept less?"

Tidal and Deezer, the French music-subscription service that recently launched in the U.S., are the first to stream "lossless" files — with a CD-quality bit rate of 1,411 kilobits per second, as opposed to the 256 to 320 rates common on other services. Audiophiles, including Young, have been complaining for years that music files compressed into MP3 and AAC download formats have eroded sound quality to the point of painful listening.

Executives from the new high-fidelity streaming services say they've identified an untapped market of music fans. "It was a natural fit to create a service that really targeted this segment of audio enthusiasts," says Tyler Goldman, North American chief executive for Deezer, which launched a $15-a-month "elite" service with the Sonos home-audio company this week. "We were quite surprised that others have not tried to address this."

The question for Tidal, Deezer and Young's high-fidelity download service Pono, is whether enough audiophiles exist to justify the costs of streaming much larger files. For the moment, they represent a small niche of music buyers — although they do tend to spend a lot of money on sound equipment, CDs and vinyl records. "It all comes down to, 'Can people hear the difference?' — in many cases they will and in many cases they won't," says Bobby Owsinski, a veteran mixer and producer who has worked on surround-sound projects for Young, the Who and others. "If I were CEO of one of those companies, I would have limited expectations." But he adds that the huge sales of Beats headphones indicate a larger number of music fans are gradually upgrading from low-fidelity earbuds.

Young's Pono service, which is supposed to open later this year, generated nearly $12 million in donations and equity through crowd-funding websites such as Kickstarter. Could streaming services raise those kinds of revenues by targeting audiophile listeners? It's unclear, but Deezer and Tidal execs are optimistic. "You're talking about a large amount of people spending a large amount of money not having the music," Deezer's Goldman says. "And now, having all those songs at high quality is a total game-changer."