I was intrigued by OraStream’s adaptive streaming technology. It seemed to be a much better approach than what the industry was doing. Imagine, a single music file that could self-adjust in 15,000 steps between MP3 and high resolution, depending on the customer’s listening situation—their available bandwidth.
Compare that to existing streaming services still using old technology—tiny MP3 audio files that stream at either 160 or 320 kbps, sometimes even less. Now compare that with high res that streams at 5,000 to 6,000 kbps, delivering more than twenty times the information.
When I had discussed streaming quality with some of the people running the streaming services, they would tell me that they don’t offer better-quality streaming because it wouldn’t work for those customers who have slow connection speeds. Therefore, the streaming companies opted to give everyone music at a quality that’s determined by the worst conditions. Those days and needs are over.
TRAGEDY
Not only does that streaming approach deprive most of us of good audio, but it’s conditioning those who listen using only streaming to believe that this is what music is all about. They’ve not heard anything better and have no idea of what they’re missing. That is a real tragedy.
The other objection to high res, the streaming companies would tell me, is that a customer would have to pay more for their data if they were using a cellular connection. High res uses more data.
Okay, there is some truth to this if the customer is using cellular and not Wi-Fi. A subscriber listening to high res could exhaust their data allowance much faster, depending on their cellular plan. But an OraStream file could simply be switched to play at old-school low res in those circumstances and use no more data. Or they could leave it full-on, hear all the music, and feel its magic. It’s the user’s choice. A real choice.
ONE FILE AND THE END OF FORMATS
The end of formats satisfies all customers, those who think they need the small files and low resolution because of poor connections or data limitations, as well as those who want to listen to high res in their homes over a fast Wi-Fi network. They’d be able to listen to a single file for any given recording. A user could listen on their phone in their car at a low resolution, and then arrive home with Wi-Fi and listen at high resolution seamlessly.
Having one file for all resolutions even makes things easier for the streaming companies. Currently, they must buy different files from the record companies for each resolution level they offer, such as 160 and 320 kbps.
IMPROVING STREAMING
What I don’t understand is why the industry doesn’t advance its streaming as the technology evolves. They do it in all other areas of tech. They’ve been using the first-generation streaming going well into its second decade, so isn’t it time to improve it? OraStream is the next generation of streaming—positioned for the future, particularly as faster networks, 5G, and less expensive data plans become available.
OraStream told me they had met with some of the major record companies and that their technology had been well received. The labels had tested it and liked it but had little incentive to push it at a time when the existing streaming services were finally making them profitable.
I really wanted to support OraStream because of the big impact it would have on improving audio quality. I believed that it could be the basis for a new generation of streaming service. I even invested my own money in the struggling company to keep it alive.
The best outcome would be for one of the streaming services to adopt it, but OraStream had little success in their efforts to get any of them interested. When I reached out to my contacts in these companies, I got much the same response. What I found was some curiosity and interest, but I also found audio quality not to be a big enough reason for any of them to make changes to what they thought was good enough. They either just didn’t know better or they didn’t really care.
Meanwhile, we went to work testing the OraStream technology to become more familiar with all its capabilities, limitations, and issues. It performed well in most situations, but we continuously came up with ways to make it work even better. That was really exciting!
Because there were so few high-res recordings available, much of OraStream’s previous work had been based on optimizing their streaming service for mostly CD quality. As noted, just before the start of every album play, they test the network to determine the optimal resolution. It starts at 160 kbps to work everywhere, and then increases within a few seconds to the appropriate level. I wanted to reduce the time for the music to reach 192/24. I worked with OraStream engineers to add some intelligence and to alter the algorithms to do such things as remembering the results of previous network queries. That allowed the music to ramp up even faster and, in some cases, avoided the need to test the network. We also added a mode in which streaming would be done at a fixed low resolution for those worst-case situations. Finally, after months of testing in early 2017, we were really pleased at how well the service worked, and we named it “Xstream.”
A PLAN
That was when I decided that we needed to write a business plan for this new high-res streaming service. I had no illusions about the difficulty of getting folks interested in another streaming service. I hadn’t forgotten about my experience with Pono. It would mean needing to raise many tens of millions of dollars just to get the service off the ground. I’d need a CEO and employees.
I wanted to at least be able to create a plan to present to the record companies, the tech industry, and potential investors to see if I could generate some interest.
My goal was to promote and expose this new technology and to put my name and reputation behind it, because it had the potential to change the face of streaming and remove consumer music’s major limitation of poor audio quality. We could have the convenience of streaming with the benefits of high res. That was my mission, more important to me than creating another company.
I worked with Elliot, Phil, and Rob Bikel, a strategy consultant and professor at Pepperdine University, to write a business plan. (Rob was referred to me by my friend Michael Crooke, also a professor there.) I also got help from Bob Gunderson and Jeff Thacker, lawyers from a Silicon Valley law firm with experience in funding startup businesses, to reach out to potential investors and partners.
Unlike Spotify, Tidal, Pandora, and other streaming services that marketed directly to users, I envisioned Xstream as a streaming service that we’d offer to select industry players. Apple focused on the quality of its camera to sell its mobile phone. Some of the cellular providers offered free video streaming. Xstream would try to find companies that wanted to be the first to offer high-res audio streaming to their customers.
I reached out to the Canadian cellular companies, Rogers and Bell Canada, and explained how they could offer their own streaming service, powered by Xstream, that would be so much better than any music streaming offering elsewhere. I offered to provide my entire archive of recorded musical performances, going all the way back to the early 1960s, exclusively to Xstream users to encourage adoption.
We got some interest, but the companies moved really slowly, and we never made much progress. One liked it, but the agreement they had with one of the streaming companies wouldn’t allow them to work with a second. They were locked into low quality. Honestly, it was a frustrating experience.
One incident I remember is when I drove down to San Diego and Jeff Thacker took us to meet with the investment people at Qualcomm. Jeff and I thought high-res music was a perfect match for the 5G technology they were developing for the cellular industry. But the meeting was disappointing. A huge group came in to hear me discuss the state of music quality, and how 5G could have a huge impact in delivering great audio, but most just sat quietly with little emotion. When I was finished and answered a few questions, one of their executives took me back to his office, not to discuss what I just presented but to take a selfie with me. They were clueless.
PRICED RIGHT
For Xstream to be viable, it had to be priced right. The industry was already charging premium pricing for higher quality streaming such as Jay-Z’s Tidal, priced at $20 a month for near-CD quality compared to everyone else’s MP3 for $10 a month.
I thought that was crazy—it was the same mistake that record companies had made when pricing downloads, and they keep doing it over and over again. I wanted all streaming to be priced the same at $10 per month. I knew that was low and would be difficult for the record companies to accept. They would see Xstream as a way to charge more because of its high-res capabilities, even when customers might use it at low res. We needed to get them to think in a different way when it came to pricing if Xstream was to have any chance of succeeding.
I decided to meet face-to-face with the heads of the labels to explain to them about Xstream and to convince them how it could benefit the industry. But I didn’t want to sell it as high res, which would lead to high prices. Instead I called it “all res.”
In January 2017, I flew to New York City with Elliot and Phil to meet with the executives of Warner, Universal, and Sony—the three companies that I needed to convince. We had meetings with Michele Anthony of Universal, Dennis Kooker and Mark Piibe of Sony, and Steve Cooper and Ole Obermann at Warner and explained the technology and then discussed the pricing.
I got good responses from everyone. They understood. While there was little awareness of our technology among these executives, they all thought it made sense.
But there was also an attitude within these large organizations to keep things as they were. That’s what the music industry has become: more interested in survival due to the turbulent times they’ve gone through, and happy with the success they’re finally seeing from the streaming services.
HI-RES STREAMING FOR $10/MONTH
I explained that I thought Xstream needed to be priced at $10 to have any chance of immediate success. We couldn’t repeat the model used for Tidal and price it high. That made no sense because Xstream was used at all resolutions, not just high. It depended on what bandwidth was available. It might be extremely low. You can’t overcharge for lower quality than Spotify. Xstream was a different animal.
Some executives pushed back because they thought it would create problems with the other streaming services. How could they allow a new company with high res to offer better quality at the same price? I kept pushing and explained how this kind of thinking didn’t work with downloads and won’t work for streaming. We want to provide the best quality at one price. Eventually I made headway, and all but Sony agreed to $10. Sony agreed to $12.99. That is a pretty good price for starters, I thought. I’m not much of a businessman. I wanted this thing to get going and have people hear and feel it. I sensed it could be a revolution.
We returned home to California trying to figure out how to move forward with Xstream and to put it to use without more delays.
A DIFFERENT IDEA
While trying to interest investors and find partners was frustratingly slow, I had a different idea: Why not use it on just my own music to show that it could be done? Reduce the pressure of having to sell the idea to all the companies and artists and raise millions of dollars. High resolution could be streamed, and I could prove it on my own turf, with my own music.