Your observations are quite normal. 128 Kbps AAC files used at the apple iTunes store are excellent and slightly better than MP3 at the same bit rate. At higher bit rates I believe MP3 can be slightly better than AAC. Of course an awful lot depends on the codecs used and the specific music. There are many examples on the web of instances where "lossy" files are audibly degraded, however, most of these are poorer codecs or at less than 128 Kbps. Of course, lossy files will always be worse than their original CD quality , however, in practice, the differences are subtle enough to be almost inaudible at 128 Kbps with AAC.

This lossy compression problem is almost irrelevant with today's crap sounding pop music (and many remasters). Unfortunately, most of what is available as pop today is already garbage even at CD quality. This is because the "loudness wars" have resulted in extreme levels of audio compression; digital tools and soft limiters are heavily used by most ME's to compress the audio signal such that it can be boosted as close as possible to the digital ceiling of the CD format. In practice this makes a CD that sounds loud, harsh and tiring because of the excessive distortion. Why they do this....who knows it is insane...possibly for the same reason that commercials are always SO loud on TV...it is intended to grab your attention (this distortion is quite instrusive and it increases the "perceptive" loudness). Apparently producers and artists have been known to demand it...they want their CD to sound louder than the competition!

What can you do to improve sound quality?

=> Buy music that has been mix/mastered by sound engineers with a solid reputation for quality, such as Doug Sax, Chuck Ainlay, Bob Katz, Bob Ohlsson, Jack Renner, Al Schmitt, Michael Bishop, Ed Cherney, Elliot Scheiner, George Massenburg, Frank FIlipetti....just to name a few [Guys you are FANTASTIC - thx so much for giving us great music - we do appreciate what you do for us and please don't ever sell out to the pressure to mix/master loud!]

Reverb my very well be correct; the original recording may simply not sound that good due to excess compression. I don't know the specific recording you are listening to, but the early Alice in Chains recordings were some of the early recordings that were released too hot and over compressed. Thus they sound flat and lifeless.

A couple things you could try:

Burn the encoded files to a audio CD along with a copy of the original and listen to all three on a decent audio system. See if you can hear a difference. This will give you a base line. It may be that even with good headphones the iPod simply is not reproducing the differences in sound between the files (iPods have great sound for a portable, but they can only do so much). If the iPod cannot reproduce the difference as you listen there is no reason to store larger files on it.)

Try listening to the output of your iPod through a good headphone amp (either a portable amp or a home system based amp). The little op-amps in portable music devices can only do so much. It may be that you simply need better amplification to hear the differences you are expecting to hear.

Have fun experimenting!

Quote:
Excellent point, I've come to realize that what we hear as a final product is largely up those who hang the mics. You've mentioned a great number of reputable sound engineers, but what are some of the artists they've worked with, so I can hear their work? Thx

Check out artists direct - find the engineer and click on "links" to see a list of projects that the engineer worked on. For example;

Doug Sax Credits

Sax Mastering Lab Clients

and, it is quite informative to read about what gear these pros select (most have well known studios and it is quite easy to find out), for example,

Sax Studio

I would also suggest that you invest in some inexpensive recording software like Sony Sound Forge Audio Suite ($69).
You can then view music files and see if the level of compression is over the top or not.

You will be surprised at what you will find and become more aware of just what it takes to make a great recording.

The comment about how poorly most pop/rock music is engineered is right on the money. I can only guess is that if your major market is downloaded MP3s, the trend, why should an engineer bother when he knows 128K transfers are good enough.