Imagine what movies would look like if producers thought everybody was watching their films on iPhones, and never in theaters or big screen TVs. That may be the perfect analogy to how the music business thinks the audience is listening to music.
The root source of the problem is that good-enough sound quality is all most people need, so the record companies and recording engineers don't have any incentive to make great-sounding recordings anymore. Other than a few audiophiles, who would hear them? The engineers have to "dumb down" the recordings to sound passably good on ear buds, car systems or plastic computer speakers.
What exactly is it that makes a great-sounding recording sound so good? That's hard to pin down, other than to say the music sounds great to you. Bad sound is something else again, and it might prevent you from enjoying the music. The new Arcade Fire CD, "The Suburbs," is in that category for me. I loved the first two Arcade Fire albums, "Funeral" and "Neon Bible" so I bought "Suburbs" the day it came out. The music is OK, but the sound is so harsh, massively compressed, and processed I can't listen to it on my high-end hi-fi or any headphone in my collection. I have noticed that playing "Suburbs" over the lowest-fi speaker I have--a Tivoli PAL table radio--hides most of "Suburbs" unpleasant qualities.
So while a 128 kbps MP3 or streaming audio will definitely lower the resolution and quality of a given recording; a CD, FLAC, or LP won't make the music sound better than it really is. Lossless files and better-sounding formats aren't the answer; only good-sounding recordings can make the difference.
The race to the bottom has its exceptions and there are still great-sounding recordings coming out;.
What do you think? Vote in the poll and share your horror stories about bad sound in the Comments section.