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I have an Apple TV 4K plugged into a Vizio TV via HDMI, and a Vizio soundbar plugged into the TV via an optical cable.

When watching movies, the volume range is pretty good. Setting my soundbar to its lowest volume point leads to low volume, and a comfortable listening volume is about 1/3-1/2 of the max volume.

But when listening to music via Apple Music app on the Apple TV, setting the soundbar to its lowest volume point still outputs loud music. There is no way I can comfortably set it to something between mute and loud. Increasing the volume on the soundbar by 1 step up from mute leads to music that is louder than what I would expect at this low volume point.

I am able to mitigate this by enabling Reduce Loud Sounds and Sound check, but the music is still a bit too loud to my taste, even on the lowest volume point on my soundbar. Plus, Reduce Loud Sounds has a negative effect on the music (highs are muffled, etc).

So what I've been doing to avoid this issue is to Airplay from my Mac to the Apple TV and setting the volume to 50% in iTunes on my Mac, but it kind of defeats the purpose.

I am observing the same behaviour with my 4th generation Apple TV, plugged into a Yamaha receiver via HDMI. When watching movies, I set the receiver volume between -20db and -30db. But when listening to music, I have to set it between -50db and -60db. So, the same behaviour (music louder than movies), but since I have a finer-grained control over the volume with my receiver it is not really a problem.

How do I resolve the issue?

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Your issue raises from the way audio data works when transferred digitally. It's possibly a bug in either your Soundbar or your TV, which you might not be able to resolve.

Both the connections from your Apple TV to your TV and from your TV to your Soundbar are digital. That means, the audio is transferred entirely digital during playback. In analog transfers, setting the volume of the audio transferred is really easy, it is equivalent to with how much electrical energy the signal is put onto the cable. Much energy results in loud audio, etc.

This isn't so easy when using digital transfers. Digitally encoded audio has always the same volume, no matter if you set the volume high or low. This is due to the encoding of the audio in bits. The amplitude of the audio at any point of the timescale is represented by a value ranging from 0 to 1 (to keep it simple). The audio should be normalized, so that at it's loudest point the amplitude is 1.

Of course, you could re-encode the audio stream before sending it out using the digital connection, and reduce the overall amplitude of the audio, so that the audio has an amplitude of e.g. 0.5 at it's loudest point. That's what the Apple TV does when transferring video, in order to allow you to change the volume of the audio using for example your streaming device. But that reduces the quality of the audio signal.

To keep quality optimal, the Apple TV does not touch the audio signal when transferring music. Therefore, music is always transferred at max amplitude 1 (and therefore probably louder than most movies). Of course you could add metadata to the audio stream to transfer the desired volume the audio should be played back with, but metadata is not always understood by all devices. In that case, it seems that either your TV or your soundbar are able to understand that volume control, or the feature you'd normally control the audio with by using your TV's or your soundbar's remote does not work for music.

In order to be able to set the volume on the soundbar, you might try an analog connection from the TV to the soundbar, or using a dedicated device like a digital-analog-converter that creates an analog signal out of the optical audio from your TV. That way, you'd keep the analog conversion away from the soundbar, and the volume control might work as expected.

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