A method and system for efficiently compressing a digital audio signal, wherein the digital audio signal includes a plurality of samples. Each of the samples are separated into a plurality of subbands. A signal to mask ratio (SMR) for each the subbands is predicted utilizing a model of relationships between energy values within each of the subbands and SMR values based on a predetermined psychoacoustic model. A number of are allocated bits in response to the predicted SMR and a preselected bit-rate. Then, each of the subbands are quantized based on the number of bits allocated, wherein the digital audio signal may be efficiently compressed. <IMAGE>
Perceptual subband coding in which the signal-to-mask ratio is calculated from the subband signals.