This paper presents a compression technique to improve the quality of three-dimensional (3D) audio produced by multiple loudspeaker channels or by headphone. The approach is based on extracting the side information of spatial sound sources within the three-dimensional space when capturing the sound sources. Different from other compression technique, the distances of sound sources are included in the side information. The separated signals of different sound sources are downmixed into one mono or stereo audio signal with the side information. The resulting downmixed signal is then compressed with traditional audio coder, resulting in a better perceptual quality of 3D audio by adding the distance parameter in the side information, and maintaining a low bit rates comparable with directional audio coding (DirAC).