Earlier this week MQA filed paperwork with the UK courts for the Appointment of Administrators. This is the British equivalent of filing for chapter 11 bankruptcy protection under United States law. There is a twist to this though as MQA may be able to survive and re-emerge but will likely have to sell off SCL6 (formerly MQAir) to do so.
There have been a series of events in recent months that likely explain why MQA filed when it did.
First, MQA’s attempt to get the MQAir codec into the Bluetooth standard failed when the Bluetooth SIG did not add it to the latest release. MQA had certainly been hoping for that as it would have given them a leg up on other competing codecs as being in the standard would ensure broader compatibility than any of the current proprietary offerings (aptX, LDAC, LHDC, etc.).
Having failed in their attempt to do that, MQAir was left to compete on a more even footing with more established offerings and has a tougher road ahead.
Second, MQA changed the name on MQAir to SCL6; a move that likely was done intentionally to distance the product from the MQA name and make it more sale ready if/when the day came to pass.
Third, Anthony Edward Rupert, Richemont’s (now Reinet) representative on the MQA board resigned his seat roughly a month ago at the same time there was a flurry of debt restructuring going on according to court filings.
Richemont holds a roughly 24% stake in MQA and may well be the stockholder who is looking to sell based on Rupert’s recent departure.
Why would MQA go into Administration though if there is still a possibility of a sale of the SCL6 codec and a return to better days?
That is where the story gets interesting. In order to sell part of MQA, under British law, administrators have to be brought in to be sure that the split is equitable to the existing investors.
In a nutshell, MQA would have to be bought as an entity if they chose to conduct the sale themselves, but under administration, parts of MQA can be sold without buyers having to take on liabilities they are not interested in.
What this likely means is MQA has a suitor for SCL6 but the buyer has said they have no interest in owning the rest of MQA. The upside is MQA may get an infusion of cash from the sale of SCL6 while the downside is that same sale is basically an admission that SCL6 is the only viable product in the MQA stable and what is left after the sale has little value.
That will be a tough hurdle for MQA’s marketing team to recover from.
In the short run, what we as consumers should expect is that MQA files will still work and still be available. I wouldn’t expect TIDAL to start taking down content anytime soon. We will likely see a slowdown in new releases appearing in MQA and new devices supporting MQA as artists and manufacturers take a wait and see approach to this whole proceeding.
We may even see some of MQA’s hardware partners decide to exclude the technology from new product releases until the dust settles.
We could see a company like TIDAL (which is now owned by Jack Dorsey’s Block, previous known as Square) buy up the remaining components of MQA after an SCL6 sale, if the price is right, and incorporate MQA technology into their tech stack. This is speculation on our part.
Chances are good that MQA will be around in some form once the dust settles so don’t write them off just yet, but the road ahead certainly looks a lot more steep and rocky and less certain than all the glowing press releases of the last few years that touted MQA as the coming standard.
MQA is being tight-lipped about all this and released only the following official statement:
“Following the recent positive reception to MQA’s latest technology (SCL6), there has been increased international interest in buying MQA Ltd. At the same time, MQA’s main financial backer is seeking an exit. In order to be in the best position to pursue market opportunities and expedite this process, the company has undergone a restructuring initiative, which includes entering into administration and is comparable to Chapter 11 in the US. During this process, MQA continues to trade as usual alongside its partners. We won’t be commenting further while negotiations take place.”
We may learn more from watching the behavior of other investors in MQA as they attempt to find the most tenable financial positions among the parts that are sold and retained.
You can view MQA’s stockholder listing here.
Related reading:
Peter
April 7, 2023 at 5:12 pm
MQA In Administration:
My concern is that this may impact my Tidal subscription
I have years invested in curating my Tidal playlists. They have done a good job of applying my preferences to their suggested listening. I like the UI and flexibility to play Tidal on any of my streaming devices. I “like” at least one new album per week.
The only perceived advantage of the MQA compression is that I can download large “hi-res” playlists to my portable streamers.
Let’s hope that Tidal can afford to quickly convert their “Masters” to the original hi-res content (like Qobuz). If I were Tidal I would have a production line going already.
Meanwhile, I have exported all my Tidal playlists to Soundiz .CSV in case I need to move to a new streaming platform, Qobuz is teasing Canadians with news of an upcoming release.
W. Jennings
April 8, 2023 at 1:56 am
I wouldn’t expect to see any changes at the consumer level immediately. Whatever ultimately transpires will likely take 12-18 months to reach consumers. My concern is some company grabbing MQA to intentionally weaponize it and hold those (like yourself) with an investment in the technology hostage for increased licensing costs. The potential for a buyer to grab the tech specifically to try and extort Tidal or end users is a very real concern.
Steve H
April 8, 2023 at 3:35 pm
Will, an excellent point. What would someone pay to exploit the 300,000 folks who can decode an MQA file from Tidal or buy MQA CDs?
Steve H
April 7, 2023 at 7:08 pm
Reinet finally realized how gullible they have been and cut off the money.
MQA does not need debt restructuring, they need cash.
Michael King
April 7, 2023 at 10:30 pm
Great news. MQA is a flawed solution for a problem that no longer exists: restricted internet bandwidth. Hats off to Linn, McIntosh, Qobuz etc. for rejecting MQA from its beginning. IMO, MQA is an embarrassing chapter in the history of hi-fi. Good riddance.
GM
April 7, 2023 at 11:57 pm
And for that matter, props to Schiit as well
Simon Paul James
April 8, 2023 at 10:31 am
Don’t forget Naim ! (and many others who were wise enough to hedge their bets and see if MQA panned out as a sound bet) [no pun intended]. The GoldenSound experiment brought the whole thing into question .. and it all seems to have gone downhill from there.
ORT
April 7, 2023 at 11:59 pm
Good riddance! Apropos this POS has folded…Here’s to MQA never “unfolding” again. HUZZAH!
ORT
Richard
April 10, 2023 at 2:07 pm
Wouldn’t SCL6 incorporate MQA technology? If so, the name change is a branding exercise to get it out from the online shadow of the tens of thousands who denigrate MQA (I’ll bet that less than 1% have ever actually heard it). Either way SCL6 not making this round of Bluetooth upgrades will really hurt. And, if I’m right, and SCL6 is MQA for Bluetooth, if MQA fails, SCL6 is worthless?
Why do people hate Bob Stewart so much? Quoting an article in Sound & Vision: “The soft-spoken pioneer is known the world over for developing the first digital active speaker, the first audiophile CD player, and the first digital surround processor in addition to inventing MLP (Meridian Lossless Packing) audio coding—the basis for Dolby TrueHD—and now MQA technology, which squeezes studio quality sound into a file small enough to be streamed over the Internet. “When we say MQA captures the actual sound of the studio, we really mean that,” Stuart says. These are just few highlights of a 40-plus-year career that is still going strong.”
Ian White
April 10, 2023 at 3:04 pm
Richard,
Part of the problem is that less than 1% have ever heard it. TIDAL (and Qobuz) struggle to own the tiny slice of the market that they actually occupy (versus Spotify, Apple Music, Amazon Music HD, YouTube) so we’re talking about a very small number of consumers.
The name change was to make it something they could sell-off to earn enough money to stay in business.
Part of the problem is that some audio magazines (we were clearly not one of them) promoted MQA perhaps too much and that made readers suspicious about their motives. I have nothing against Bob. He’s done a lot of really great things with Meridian.
At the end of the day — the market doesn’t care enough about hi-res audio to make it profitable enough for some companies to stay afloat.
Best,
Ian White
Best,
Ian White
W. Jennings
April 15, 2023 at 8:13 pm
SCL6 can and does operate independently of MQA and can be used with other file types, thus the rebranding makes sense and is indeed most likely a move to prepare for a potential split into MQA and SCL branches and the eventual sale of one, the other, or both. I have nothing against Bob personally and think he’s contributed a lot more to the audio world than most of those belittling him combined. I do think it was a giant misstep to have adamantly defended MQA as lossless during the time it was made public by others that it is not. Bob and others lost a lot of credibility in that moment. I think the real problem is; had MQA come to the market 2 years earlier, it wouldn’t have mattered that it was not lossless as if it was small enough to stream well it would have been a win, but by the time it was widespread, bandwidth had improved enough that being compact wasn’t enough to sell it, they needed it to be compact and just as good as things like FLAC to compete, so they stretched the truth a bit and said it was. To my mind, MQA was a solution in search of a problem as by the time it arrived in the market, the bandwidth was already improved enough that it wasn’t needed.
ORT
April 8, 2023 at 9:16 am
I suggest Exorcism to free any brethren from the Demon MQA and its ever present stIncubus, Blob Stewfart.
“The Power of Schitt COMPELS you!”
Father ORT
Jay
April 10, 2023 at 10:12 am
I have seen a few posts on this MQA news, but your article was the only one that was actually useful. It filled in some knowledge gaps and left me better informed – for that, thank you!
Ian White
April 10, 2023 at 11:24 am
Jay,
Credit to our Headphone Editor, Will Jennings, who actually treated the story as something bigger than just a Chapter 11 announcement.
Best,
Ian White
MrSatyre
April 10, 2023 at 9:48 pm
It will be sold off in origami files to multiple buyers. Each file will unfold into a complete company.
Ian White
April 12, 2023 at 5:04 pm
Ouch.
Well played.
We will be lossless without them?
Ian White
ORT
June 19, 2023 at 3:44 am
Anytime I feel down about music I simply come here and read about MQA going the way of the DooDoo, i.e. Flushed.
Apologies to Rogers & Hammerstein
Whenever I feel afraid
I hold my head erect
And whistle a happy tune
So no one will suspect
MQA
While listening to the Blues
I pray that no one knows
And claim it’s all good with Roon
And no one ever knows
MQA
The result of this deception
Is people, they still can’t tell
For when they claim their BS is real
Well they can go to Hell
I tell myself that it’s Roon
With every single note
The fappiness in the tune
Convinces me that it’s MQA
Make believe you’re smart
And the trick will take you far
Your name’s Bob Stewart
As you make believe you’re smart
It’s all MQA
And you make believe you are
Whenever I feel afraid
That people will all suspect
And notice there is no Roon
So no one will respect
MQA
Whilst arguing that it is
All that the artist sang
The artists all say its twue
And no one gives a dang
MQA
The result of this deception
Is you can’t really tell
For frAudiophiles all get bro’ deals
Blind tests are a No Sell
I whistle a song I know
And ev’ry single time
The fappiness in the Roon
Convinces me I love MQA
Make believe you’re right
And the difference you can tell
You may be as right
As you make believe you are
You may be as right
As you make believe you are…
Cole pORTer