Audio - Parametric Stereo
Parametric Stereo is a feature used in Advanced Audio Coding to further enhance efficiency in low bandwidth stereo media. It is part of the aacPlus v2, along with Spectral Band Replication .
Parametric Stereo works by taking the two mono streams that make up a stereo stream and combining them together to form a new single mono audio stream. This is very similar to the MP3 joint stereo idea, but 2-3 kbit/s of side info (the Parametric Stereo) is also recorded. By having the Parametric Stereo side info along with the mono audio stream, the decoder (player) can reproduce the original stereo.

Because only one real audio signal is sent, along with the negligible Parametric Stereo side info, a 24 kbit/s stereo stream of audio and a 24 kbit/s stream of audio with Parametric Stereo will be drastically different in quality. This can be modeled as:
12 kbit/s mono + 12 kbit/s mono = 24 kbit/s
But, with Parametric Stereo 22 kbit/s mono + 2 kbit/s PS side info = 24 kbit/s
This makes the overall sound quality sound like a 22 kbit/s per channel piece of audio, rather than a 12 kbit/s piece of audio. That's 10 kbs more per channel, making the comparison more like:
24 kbit/s vs. 44 kbit/s
for the same amount of data.
* The above text is quoted from Wikipedia
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