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The more bits used to represent each sample, the finer the granularity in the digital representation, and thus the smaller the quantization error. Such ''quantization errors'' may be thought of as a type of noise, because they are effectively the difference between the original source and its binary representation. With PCM, the audible effects of these errors can be mitigated with [[dither]] and by using enough bits to ensure that the noise is low enough to be masked either by the signal itself or by other sources of noise. A high quality signal is possible, but at the cost of a high [[bitrate]] (e.g., over 700 [[kbit/s]] for one channel of CD audio). In effect, many bits are wasted in encoding masked portions of the signal because PCM makes no assumptions about how the human ear hears.
Coding techniques reduce bitrate by exploiting known characteristics of the auditory system. A classic method is nonlinear PCM, such as the [[μ-law algorithm]]. Small signals are digitized with finer granularity than are large ones; the effect is to add noise that is proportional to the signal strength. Sun's [[Au file format]] for sound is a popular example of mu-law encoding. Using 8-bit mu-law encoding would cut the per-channel bitrate of CD audio down to about 350
==Basic principles==
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