CD/lossless versus iTunes & Amazon downloads

I've been trying to search Audiogon for information on this, but seems like next to no one downloads songs from iTunes or Amazon.
For the past 5 years, almost all of my music listening has been done in front of the computer while working on other stuff. I've bought a mix or CDs and downloaded albums from iTunes and Amazon. There's tons of albums you can get on Amazon for $5 at an approx 256 VBR bit rate. (I'm just using an iMac with powered M-Audio monitors).

I'm about to upgrade to add a little DAC (HRT audiostreamer), an amp (NAD or MF A5), and running this through my Magnepan MMGs. Will this cause a big difference in sound between the compressed downloads and CDs? Any chance the mp3s will sound worse than they do on my current setup?
CD/lossless sounds very good. MP3 downloads from I tunes and other sources are compressed and don't sound nearly as good. Although, like cds, the sound quality varies. With a better system, I've tended to avoid downloading, unless you find something you like on HD Tracks. I just buy the CD and burn it to my iMac. To me, itunes is for picking up a song or two here and there when the quality doesn't matter so much.

However, I regularly listen to internet radio on i-tunes, and depending on the station it can sound from pretty bad to quite impressive.
Yes. As you move to more resolving and detailed equipment, you will notice the differences in your source material more and more. It is a slippery slope to be sure, but no reason not to do it (or at least no reason that you'll get any traction with around these parts).

For a good many folks, they will always be perfectly happy listening to a mix of source formats -- lossy mp3 or AAC, CDs, and even higher-resolution formats -- on gear which makes it all sound pretty much equivalent. Indeed, there are multi-billion dollar industries built on the very correct assumption that the vast majority of people really don't give a damn. Perfectly legit.

This spot, and others like it, is where the minority of us obsessive social outcasts who very much do give a damn tend to congregate. If you care to listen, and invest in gear thoughtfully enough (and it doesn't have to be particularly spendy, just thoughtful) to reveal the differences, you will definitely hear the difference, because they are very real. The new gear that you are contemplating will very likely open this door. The lower bit rate files may well begin to sound brittle, anemic, washed out, etched or any manner of other imperfect efforts at describing what you might expect from a process that identifies the most extreme sounds from a digital track and then deletes and compresses everything else in order to save space. What's left is the form and the shape of all of the sounds, but just the hollowed out skeleton without the inconvenient and bulky fleshy bits that make living stuff, you know, live.

Now, assuming you begin to notice this difference more and more, and with the new gear I suspect you will, what you do about it is quite another question. If you shrug, listen to some more than others based on the music you enjoy more than anything else, and continue on with a happy and productive life, then god speed. But if you find yourself fascinated with these differences and begin to systematically upgrade to higher and higher resolution source material, and then equipment, eventually to realize that you've come to dwell in a world where you're constantly aware of sound quality and perplexed by the vast majority of folks who put up with junk and how can it be that they just don't get it . . . then I feel for you. And welcome.
yes...huge difference imho. Mezmo points out the trail pretty accurately. all i can add is to cut your loses now and stop paying for the crappy downloads immediately. you'll kick yourself LESS down the road =)
i have stopped downloading from itunes. why pay full retail for compressed music? buy the cd and put it in your computer correctly and don't worry about it again. since you have good gear that plays reproduced music well you won,t regret it.
Great, thanks for the information. Mezmo hit on the actual question I was getting at before the word limit cut me off:
When you start compressing the files, what is the first aspect of the sound to go? I'd heard sound stage always took a hit first.
I'll have to do my own tests once I get set up to see how much the difference matters to my hearing. I'm also going to be adding a vinyl section to my new system, can't wait.
Mezmo'spost was one of the best posts I've read in quite some time.

If saving a few dollars is a priority, look for used CDs on Amazon. I've found a lot of stuff that was barely used for pretty cheap that I wouldn't have bought at full retail.

I suspect you will really notice the limitations of compressed music in comparison to vinyl.