A method and apparatus processes multi-channel audio by encoding, transmitting or recording “dry” audio tracks or “stems” in synchronous relationship with time-variable metadata controlled by a content producer and representing a desired degree and quality of diffusion. Audio tracks are compressed and transmitted in connection with synchronized metadata representing diffusion and preferably also mix and delay parameters. The separation of audio stems from diffusion metadata facilitates the customization of playback at the receiver, taking into account the characteristics of local playback environment.