There's a post over on Slashdot linking to an article at The Christian Science Monitor about portable music players and compromised sound quality. This is certainly a concern of ours. Many people probably can't really hear the difference between a lossy compressed audio track and a losslessly compressed audio track when listening with their portable music player. And most of the major online music distribution services like iTunes offer only lossy compressed audio probably because the majority of their customers are iPod owners and it is faster and easier to download these smaller files.
The article also mentions a study by the Consumer Electronics Association (CEA) that showed 56% of consumers have never heard what they would consider a 'great audio experience' and therefore don't even know how to evaluate audio quality. I don't know if this is discouraging or if I should be encouraged by the potential untapped market.
However, if the music industry eventually replaces all of the packaged uncompressed audio currently available on optical disc with downloadable lossy compressed audio tracks, then those of us with higher quality audio systems might suffer.
I don't think this will happen. I've mentioned in earlier posts that there other online sources who offer downloads of uncompressed or losslessly compressed audio like Magnatunes and MusicGiants. We may have to pay a little more for these higher quality formats, but I think it is worth it. It will be interesting to see if the larger online music stores ever offer high quality audio or if it just becomes another niche market. However, with the Internet and worldwide distribution, niche markets can do pretty well because of the long tail effect.