Short answer
Sound level is coded in spike rate, frequency is coded by a place-frequency map.
Background
Spiral ganglion cells (SGCs, the secondary sensory neurons making up the auditory nerve) are continuously firing cells in a healthy ear (they fall silent when the hair cells degenerate, leading to deafness). In fact, their base frequency in silence is pretty high. The only thing the hair cell input does is lowering, or elevating the threshold and hence affecting firing rate. During a sine wave stimulus (a pure tone), the stereocilia of the hair cells deflect in one phase, and inflect on the other. One phase hence depolarizes the SGC, the other hyperpolarizes it. This generates a near-perfect representation of the sine wave input at low frequencies. At high frequencies the SGCs may skip a phase or two, but because multiple SGCs are involved, the population code is still stochastically spot on.
Sound level is coded in spike rate, frequency is coded by a place-frequency map (Müller, 1996). The base of the cochlea codes high frequencies, the apex low frequencies. Hence, loudness is coded by every SGC, while frequency determines which SGC is activated. An informative overview of hair cell signalling is provided in Fig. 1.

Fig. 1. Hair cell transduction. source: Pasadena City College
References
- Kandel et al., Principles of Neural Science, 4th ed.
- Müller, Hear Res (1996), 94(1-2): 148-56