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I think you are missing something with regards to file formats. 
Anything bought from the iTunes store will be in a "lossy" format.  MP3
players and iPods have limited storage capacity, so the files are
compressed to make them smaller.  MP3 is a standard compression format,
and Apple uses a similar format (AAC, I believe).  Not sure about your
MP4, but I think the Apple AACs may "show up" as "MP4" - anyway, these
are all LOSSY compression formats.  To make the files small, some of
the original information was "thrown away" using complex computer
algorithms which try to determine what information is "least
important".  There are various levels of "lossy-ness", depending on the
parameters used to convert the information.
There are, however, "lossless" compression formats which provide some
file-size reduction (but a lot less than the "lossy" compression), but
provide bit-accurate representation of the original information.  For
example, if you "rip" a CD, using a lossless compression format you
will end up with ALL the information which was on the CD (you don't
"throw anything away").  If, however, you convert/store into a "lossy"
format (MP3 or AAC or MP4(?)), you've created a smaller file, but lost
some information in the process.

All that said, to get the best sound, you really should stick with
lossless file formats.  FLAC is the generally recommended standard, and
there is also an "Apple lossless" format (ALAC, I believe).  For
anything you have already on CD, this would require re-ripping the CDs,
and storing in one of these lossless formats.  The Squeezebox Receiver
(player part of the Duet), Transporter, Squeezebox2, Squeezebox3 all
can play the FLAC format directly.  There are tools for doing this, and
plenty of more detail in the "Ripping / Encoding / Transcoding /
Tagging" forum, and probably on the wiki as well.


-- 
tcutting
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