There are two necessary steps to perform mid-side processing. First, the two-channel, left-right stereo signal must be encoded as a two-channel, mid-side stereo signal. Then the process is reversed by decoding a conventional two-channel, left-right stereo signal.

Mid-side processing is based on an interesting consequence of stereo panning. For signals panned to the center of the stereo field, the amplitude of the signal is identical in the left channel and the right channel. Therefore, if the right channel is subtracted from the left channel, any signals panned to the center will cancel out. However, any signals panned to either of the sides will be left over.

Furthermore, the right channel can be added to the left channel. This will result in a new signal called the “mids.” This is because many panning functions have a greater combined amplitude for signals panned to the center of the stereo field. By adding the two channels, signals panned to the center will have a greater amplitude than signals panned to the sides.

Therefore, the following equations can be used to perform mid-side encoding:

$M = \frac{1}{2}(L + R)$

$S = \frac{1}{2}(L - R)$

The complementary step to invert the encoding process is called: decoding. It can be used to reconstruct a conventional stereo signal after the encoding processing.