by Kevin Erickson, Communications Associate

Pono, the Toblerone-shaped personal hi-res audio player backed by Neil Young and endorsed by a gaggle of high-profile rockers, recently made waves at SXSW, and its Kickstarter campaign has already zoomed past its stated goal and raised over $5 million with 16 days to go. But will the device live up to the hype? More importantly, what will it mean for musicians?

At the very least, we know that the consumer interest is real, not just because of the successful crowdfunding effort, but because of research conducted by the Consumer Electronics Association:   

CEA research finds four in ten (39 percent) consumers with a moderate interest in audio indicate they are willing to pay more for high quality audio electronics devices. Nine in ten consumers say sound quality is the most important component of a quality audio experience.

Still, there are plenty of naysayers who doubt the device will make much of an impact. It’s certainly true that industry attempts at encouraging adoption of hi-res audio formats in the 2000s haven’t exactly taken off. Today, DVD-A, SACD and Dualdisc formats have mostly been abandoned. 

But there are some crucial differences. To varying degrees, DVD-A, SACD, and Dualdisc all have been proprietary formats which presented barriers to adoption by smaller labels and indie artists without deep pockets. Likewise, the costs associated with manufacturing quantities of discs for these unproven formats discouraged experimentation. As a result, the catalog of offerings for these formats weren’t particularly robust, and focused largely on major label releases. (There were exceptions; Drag City’s release of a gorgeous surround mix of Bonnie Prince Billy’s The Letting Go on DVD-A comes to mind.)

In contrast, Pono’s preferred format is FLAC—a lossless open-source format which can be generated rather simply from original masters, doesn’t require additional extensive up-front manufacting costs, and which indie labels (like Merge, Beggars Group, Hyperion, and Drag City) and retailers (like Bandcamp and HD Tracks) are already adopting. It integrates fairly easily into existing online retail storefronts, and as network speeds increase and storage becomes cheaper, the larger file size ceases to be an issue.

Detractors may ask, “Okay, then what’s the big deal if FLAC players and FLAC files are already available? What’s with all the hype?” Well, one thing that we’ve learned from watching the rise of Beats by Dre headphones is that having a strong marketing push with an artist-centric focus really can help popularize an audio technology outside narrow audiophile circles. Regardless of what you think of Beats Headphones (like most audio nerds, I find them bass-heavy and not that impressive), their popularity has driven broad consumer interest and growth in the broader headphone marketplace. It’s possible that Young and his stable of artist endorsers could similarly generate broader interest and adoption of lossless and hi-res audio; at the very least, such a concerted strategy has not yet been attempted. You still can’t purchase lossless digital files from the biggest digital music stores like Amazon and iTunes. (Apple software and hardware annoyingly doesn’t support FLAC, opting for for a proprietary-until-recently Apple Lossless format, which, weirdly, iTunes Store doesn’t even sell).  

Other detractors question whether the improvement in quality touted by Young and co. will even be perceivable to the average consumer. Much of the marketing blitz surrounding Pono has focused on bit depth and sample rate, reigniting long-running debates among audiophiles and recording engineers about aural perceptibility. For a couple of interesting takes, here’s Justin Colletti taking a skeptic’s view and Allen Farmelo with a more optimistic perspective. But what’s missed in this debate is that larger file size is only one of the technological upgrades that Pono seeks to popularize. I suspect that much of the focus on this particular variable is because it can be represented on a bar graph in a way that average music fans find comprehensible. 

In fact, much of the improved audio quality you may hear with Pono will likely owe as much to the hardware as to the files. The Pono player’s specs boast high quality Digital Audio Converters (DACs) and a much better headphone amp than you’d find in your iPhone. This points to a factor that could really help with widespread adoption: Pono may improve the sound of even the compressed, lossy file formats like MP3. On the other hand, increased clarity could reveal the flaws and artifacts of lesser audio files, reinforcing the case for lossless listening.

It’s hard to anticipate what impact Pono might have an impact on illegal downloads. Over the years, we have heard file-sharers cite the lack of commercially available full-resolution lossless options as a justification for their activity—“If only the record industry would give me a way to buy uncompressed files instead of AACs or MP3s, I would pay.” While such a defense might be sincere, it could be a dodge. Still, as pricing for Pono’s store is likely to range from $14.99-$24.99, it’s hard to say how many of the non-paying crowd will be persuaded to buy. (Indie labels currently typically sell full-resolution, full-length album FLACs at $10.99-$11.99, not much more than MP3s.)  

Of course, retail price has to be considered in the context of how the money is divided up. Some at SXSW were concerned that Pono CEO John Hamm gave a confusing answer to a pretty direct question about what the rightsholder/retailer split would be from Pono’s store. Hamm has since indicated that the store will employ the same 70/30 split as Apple’s iTunes store. But if artists or labels don’t like the terms offered by Pono’s store—either the splits or the pricing schemes—they can use other retail options like Bandcamp. (It’s worth mentioning here that such competive flexibility is made possible both by net neutrality and the “safe harbor” provisions of the DMCA, which allow services like Bandcamp to exist.)

One final objection to Pono is that consumers just aren’t going to be interested in formats that are based on downloads rather than streams. Pono’s FAQ suggests that it’s possible that streaming may ultimately come to Pono as well. But it’s also worth remembering that for now, digital sales still outpace subscriptions in revenue and in user base, and while adoption of streaming is indeed growing, different types of consumers value different things in their music listening.

Vinyl sales, for example, are up 33% over last year, according to the RIAA. (As RIAA’s data set tends not to capture some of the DIY/micro-indie marketplace where vinyl adoption is particularly strong, I’d guess that number is actually likely to be even higher.) While that may only amount to a small chunk of the overall music marketplace, for many artists it can be crucial. I’ve written elsewhere about the issues of scale associated with the economics of streaming, but it’s fair to say that certain artists are going to find it more achievable and economically viable to cultivate a smaller loyal group of high-value fans than try to market themselves to a large mass of people and extract micropennies from each one. Vinyl is one popular tool for indie artists and labels using this business model; high-resolution audio might be another. (Vinyl/FLAC bundles already appear to be growing in popularity.)

To me, this suggests that Pono has potential that extends far beyond the narrow “wealthy white boomer guy listening to Steely Dan’s Aja” audiophile caricature demographic. Pono is unlikely to ever be as ubiquitous as the CD player or even the iPod, but it could prove to be an important part of the music ecosystem for at least certain kinds of consumers, labels, and artists.