I remember when iPods were first introduced, all my drummer friends said "The cymbals are all squashed. This sounds like crap!". And, though I may not be as particular about cymbal fidelity as they were, I pretty much agreed. The file format we were listening to was MP3, and they are still notorious for their ability to wreak havoc on a great recording, but there are options available that can help.
MP3s (and AAC encoding) use "lossy" compression, this makes files smaller-which allows you to fit many more of them on your hard drive-but it also degrades sound quality. With today's larger hard drives and cloud storage options however, file size is not as big of a concern as it once was, so "lossless" file types and other options should be considered.
Many factors impact digital sound file quality: the type of encoder used, the sample rate, the bit rate, and the characteristics of the original recording. Lower bit rates produce smaller file sizes, but they also damage audio quality. 128 kbps is a standard bit rate for digital music-which is higher than the 96 kbps of FM radio, but lower than CD quality which is between 224 and 320 kbps. Then there's the sample rate, which is measured in Hertz (Hz) and is typically 44.1 kHz or 48 kHz for digital music.
You can customize these settings in the iTunes Import Preferences (iTunes-Preferences-General-Import Settings) and vastly improve the quality of downloaded / ripped songs. Next to "Import Using" you can choose between AAC Encoder, AIFF Encoder (lossless), Apple Lossless Encoder, MP3 Encoder and WAV Encoder (lossless). Next to "Setting" you can select "Automatic" or "Custom". The Custom settings are where the real flexibility lies. Here you can choose a custom Sample Rate (8 – 48 kHz) and Sample Size (bit rate, 8 or 16 bit).
The higher the Sample Rate or Sample Size number, the better your songs will sound. For real hi-fidelity you can save files in the WAV or AIFF formats with a 96kHz Sample Rate and a 24 bit Sample Size, the result will be roughly 4x the quality of CDs. Apple Lossless encoding will compress the file, but retains all information, so it is a good option as well. Experiment with these setting to find the perfect balance of sound quality and file size.
The final link in the sound quality chain is your choice of speakers, headphones, or earbuds, and these have a huge impact. Even the highest possible bit rates and sample rates won't sound good through a bad sound system. So, if you care about sound quality, make some iTunes adjustments and get the best speakers or headphones you can afford. Your ears will thank you.