Is Apple’s iTunes Store Missing a High-Quality Audio Trend?

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Will Apple (NASDAQ:AAPL) soon begin offering consumers a premium digital audio file format in the iTunes Store? While standard compressed digital audio file formats such as MP3 or AAC offer users the ability to store large amounts of music on their digital music players, the convenience of the smaller files comes with a tradeoff in the overall sound quality of the recording. On the other hand, although lossless files retain a CD-quality sound, they can take up considerably more space than standard compressed digital audio file formats.

Apple has adopted the AAC (Advanced Audio Coding) format and currently sells music files in this format through its iTunes Store. As noted by tech commentator Kirk McElhearn on his Kirkville blog, the quality of Apple’s AAC iTunes music files are “good enough” for most listeners. However, the he also noted that Apple’s iTunes Store may be missing out on an opportunity to cater to a minority of audiophiles that appreciate the high-quality sound available in lossless formats like FLAC (Free Lossless Audio Codec).

Although Apple doesn’t support FLAC, it has developed its own lossless format called Apple Lossless. But the iTunes Store does not sell music files in the Apple Lossless format. Apple does sell “Mastered for iTunes” music files that were made with a proprietary compression technique developed for the AAC format. McElhearn noted that Mastered for iTunes files don’t always sound better than regular AAC files. This means Apple customers are left without a high-quality audio file option when it comes to buying music in the iTunes Store.

Giving users a range of digital quality choices would also not be without precedent for Apple. McElhearn reports that Apple already offers most movies and TV shows in a SD (standard-definition) or HD (high-definition) resolution format. While SD may be “good enough” for many viewers, there are obviously some consumers that prefer a higher-quality video experience, even if it means the video file will consume more of their device’s storage space. McElhearn noted that Apple offers most of its HD videos in two different levels of quality, 720p or 1080p.

McElhearn is not the only industry watcher to note the existence of a consumer market for lossless music files. NPD analyst Benjamin Arnold recently told Apple Insider that the growing consumer trend for high-quality audio may lead to a resurgence of the iPod, since it offers more storage space than the iPhone. Beats Music, the premium headphone company founded by Jimmy Iovine and hip hop artist Dr. Dre, holds a 65 percent share of the headphone market thanks to a growing consumer appreciation for high-quality audio.

Regardless of whether the market for lossless audio files is big or small, Apple would still likely reap the benefit of good publicity if it included these high-quality audio files in the iTunes Store. Per McElhearn, no major music retailer currently offers lossless files.

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