A technique for further compressing digital sound by eliminating frequencies that cannot be perceived by the human ear. Frequencies that are too low or too high are eliminated as well as soft sounds that are drowned out by loud sounds. When several musical instruments are playing simultaneously, depending on frequency and volume at any given moment, the sounds from one instrument can cancel out the sounds of another. The frequencies that cannot be heard are removed.

Perceptual audio coding uses the psycho-acoustic algorithms developed by Dr. Amar Bose, inventor of the Bose speakers and whose company is known for its quality audio products. MP3 uses perceptual audio coding to dramatically reduce the amount of digital data on a music CD. See MP3, audio codec and speech codec.