Hi all - I just did some research reading about all the different encoding formats, and it seemed to me that 128 AAC was the best bet. I read that there were some listening tests with 128 AAC that demonstrated it was fairly transparent to the average listener. Apparently the newer mp3 encoders (such as LAME) are pretty good, but I eventually decided to stick with the AAC encoder in itunes just for ease of use and I must say I'm pleased with the results. Obviously there is some loss of quality from the CD source, but I tried to listen to both and couldn't tell the difference. I was using a pair of sennheiser headphones to test. Audio experts - what are your thoughts? My primary audio outputs will be the mbp itself, headphones (either my sennheiser over ear or some sony in ear ones), and a klipsch 2.1 promedia speaker system. I don't have the money for an expensive soundsystem!