Apple (NASDAQ:AAPL) is set to launch its music streaming service -- Apple Music -- on June 30. For $9.99 per month, subscribers will be able to stream millions of songs on demand to their PC, Mac, iPhone, iPad, or iPod touch. Apple TV and Android apps will arrive later this year.
Apple is entering a crowded field with several well-established competitors, including Google's Play Music, Rdio, and most notably, Spotify. Although Apple is offering a few unique features that should help distinguish its service, it still falls short in one potentially significant way.
256 vs 320
When it comes to digital music, there's an important concept to understand: compression.
Physical CDs offer lossless audio -- the sound is (for the most part) all there. If you take that CD, pop it into a PC, and convert it to a collection of mp3 files, you degrade the music ever so slightly; some of the data that makes up those songs is lost forever. Still, it's a trade that's often worth making: uncompressed audio files can be 10 times larger than their compressed counterparts. When you're trying to fit several thousand songs onto a relatively small hard drive, compression makes sense. It also makes sense for streaming, at least in terms of streaming over a connection (like a mobile network) with metered usage. Larger files eat up more bandwidth -- streaming a lot of lossless audio could quickly devastate a 2GB per month smartphone plan.
But compression isn't binary: the degree varies with the bitrate used during the encoding process. There are many standard bit rates: for mp3s, common bit rates include 128kbps, 192kbps, 256kbps and 320kbps. The higher number the larger the file, but the greater the quality.
Apple Music will stream songs in 256kbps. Most of its competitors, including Spotify, stream at 320kbps. In other words, Apple appears to be offering lesser quality music for the same price.
But does it matter?
Admittedly, the comparison is a bit more complicated than that. In addition to bitrate, there's the issue of format: Apple Music will stream songs in AAC. Spotify streams Ogg Vorbis files, while Google Play Music relies on the traditional mp3 format. The relative superiority of these formats remains hotly contested -- many contend that AAC is superior to mp3 at lesser bitrates, but it's far from settled.
The issue of whether or not consumers can even tell a difference might be more important. Evidence suggests that, at least at Apple Music's bitrate, most listeners cannot discern compressed audio files from CDs. A 2009 study from McGill University found that, while listeners could tell the difference between CDs and mp3s encoded at 192kbps, they couldn't tell the difference between CDs and mp3s encoded at 256kbps -- 320kbps may be overkill.
Apple isn't fond of playing the numbers game
Apple isn't likely to focus on the quality of its music streams in its promotion for Apple Music -- its press release makes no mention of bitrates or relative music quality. That would run counter to Apple's long-standing ethos -- a commitment to avoid competing purely on benchmarks and numbers.
But its competitors could look to exploit it in the months ahead. Even if the difference is at best superficial, other streaming services could claim better sound as a competitive advantage. Jay Z's much-maligned Tidal is currently attempting to offer lossless music as a differentiator, though success has been relatively mild, at least so far -- the service had less than 800,000 subscribers as of April.
Ultimately, other factors could be more important to Apple Music's long-term success, but its lower bitrate could prove to be an unfortunate handicap.
Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.