You talk to Apple Music, as they are the ones sending that ‘flag’ through to Sonos. 
 

As near as I can tell, it’s not high on Apple’s priority list, perhaps because people are complaining to Sonos, who has no ability to make changes on Apple’s servers. 

The “not encoded correctly” message can be due to packet loss caused by local network issues.

See 

If that doesn’t help then submit a system diagnostic, note the number and call Sonos Support.

I'm getting this for the first time today. Stopping playback or sometimes skipping with the encoding error. Never had a problem with Sonos before (many years). Haven't moved any devices etc. I'm streaming from Amazon Unlimited via S2 app.

I'll submit a diagnostic if it is still happening tomorrow.

It's been going on for months. Neither Sonos nor Apple accept blame or have any intention of fixing it. The only work around I have been able to find is to go into my playlist and delete this song from my Apple Music library and then re-download it and then it seems to work. 

It’s so frustrating. However, it’s nothing to do with Apple in my case as I’m getting the problem when streaming Amazon Unlimited. It’s regular streaming, ie, not my own files I have added to the library.

Download it? Onto your mobile? The only way Sonos would be able to play an Apple Music download is if the user is playing via the native Apple Music app over AirPlay. Of course AirPlay introduces its own challenges as the stream has to loop across the network, through the mobile.

Amazon should adapt to adverse network conditions, temporarily falling back to SD if necessary. Have you consulted Sonos Support after submitting a system diagnostic?

Hi, well today it seems to be working perfectly again. First thing this morning, a speaker dropped out, so firstly I checked my mobile’s connection to my WiFi. It was on Randomised MAC and the speed was low so I changed to Phone MAC with a really fast speed. (Sometimes this happens on my phone, don’t know why, and changing this setting fixes the speed). I then followed the basic troubleshooting (turn speakers off and on, wait for 1-2 minutes etc). Then I decided to try just using the device that I troubleshooted with (my Android mobile) to control Sonos via S2.  Not sure if that has anything to do with it but I have several other devices (iPad, Android tablet, Android phone, Mac) that I control Sonos with, so I haven’t used those again yet.

The other thing I’ve done so far is play in both my rooms at all times (not just one room), at least for now.

As I say, seems to be perfect now. Not sure if any of the things I did above fixed it or not though to be honest.

It’s sounding rather as if you might have experienced IP address duplication for a while. Consult your router documentation and reserve/fix the IP addresses for common network clients such as Sonos devices and mobiles. Disable randomised MAC addresses on mobiles when connected to your home WiFi.

Thanks v much. Will do. Seems that I might have stumbled on the cause by accident, so thanks for outlining the steps to keep it running properly. 

You can simply re-add it to your library, but I tend to download everything so that if I'm in a bad cell area, I can still listen to music without interruption. You just have to delete this song from your library and then we had it. But download part is this something that I do. 

Getting this inconsistently sometimes a track will play sometimes it won’t 

especially occurring for YouTube Music

Occasionally  for Apple Music and Amazon Music

Nothing has changed in the sources I play from - and some tracks will occasionally play - then all of sudden they are no encoded properly… so which is it?

Im sorry I love my Sonos system - but I really do feel inclined to say this issue is Sonos issue. 

Fixing IP addresses for my phone and Sonos speakers helped, as per @ratty ‘s suggestion above.

I was also experiencing speaker drop outs, so did a diagnostic and phoned Sonos.

The adviser found massive Wifi interference with many other routers in my neighbourhood using the same channels. He found better channels and talked me through the whole process. Interference dropped from 65% to 30% and I haven’t had any issues at all since.

The combination of @ratty ‘s fix and the adviser’s fix has everything running flawlessly now. No encoding problems. No dropouts.

(I mainly use Amazon Unlimited).

to add to this thread, I am having the same issue.  I have found issues saying it is Sonos refusing certain DRM?  ALSO, I can play all these songs on Apple Music, so if it is DRM, is Sonos, not apple.  I am going to try some of the wifi suggestions here, but this is incredibly infuriating with the amount of money I have put into this Sonos system.  I have been a customer for years, and I am constantly running into issues.  Sonos has never fixed the ‘large’ music library playlist issue - so I have to pay for Apple Music to play my iTunes library, because Sonos can’t handle the size of my library.  Now this.

Sonos has never hidden the limitations on local library sise, nor have they announced any plans to increase it so I can’t hold that against them.

There are several other options for large libraries so I can see their position.

DRM is the fault of the company putting it on the music, not the company trying to deal with the grief it causes. My solution is simple, I try to never buy any DRM’d goods.

A called the Sonos help line and they were able to reboot our entire system remotely which fixed the problem for about two weeks. It’s happening again today, a weekend, so no access to the service telephone line. I hope that they add a REBOOT option to the APP so I don’t have to keep calling.

We used to have a reboot available from the Sonos internal web pages but they took it away.

You might try setting reserved/static IP addresses for your Sonos. Power them all down, reboot the router and power them back up. It may not be your issue but it takes one of the more frustrating options off the bug finding/fixing table.

Thanks Stanley! Will give that a shot just to limit possibilities.

This is not a new problem and it is not just apple music.  Amazon, sirius constantly, everyday.

 WHEN IS SONOS GOING TO FIX THIS.  THE S1 APP HAS BECOME MORE AND MORE PROBLEMATIC AND SONOS REFUSES TO ACKNOWLEGE THAT THEY DO NOT EVER INTEND TO REPAIR IT.

Have you explored the matter based on @ratty’s answer here in this thread, as usually this occurs due to packet loss caused by local network issues. I don’t think there is anything to fix on the Sonos side, but you can always go onto submit a Sonos system diagnostic report from within the Sonos App, note it’s reference and then contact/chat with Sonos Support Staff via this LINK and see what the Staff can perhaps suggest to resolve the matter.