i think you're confusing something here... the itunes music store doesn't offer mp3s at 128 kbps, they sell aac files at 128 kbps, which sound a hell of lot better than mp3s.
i'll admit you can hear a difference if you've got gold-plated cables and a high end system, but on most people's stereo system you won't be able to tell which is cd and which is mp3...
selling aiff or wav files at "full cd quality" would be totally unfeasible, as anyone with a modem connection would go insane trying to download 40 or 50 mbs per song... :D

"... and which is aac..." is what i meant to write, of course... :D

I don't have an iPod and I don't buy music from iTunes -- but I do have an iMac, and when you rip music from CDs (my preferred method) the bit rate level is optional; I usually use 128, but it can go higher. Anyway, it sounds fine to me.

The real boot to the prunes isn't the encoding, but the digital rights management (DRM) this means you only "own" the music you purchased in theory.

In practice, the license and terms to listen to listen to the music you purchased can be changed or revoked at will at any time.

These terms are even worse at the other services. At least Apple makes an effort to treat their customers fairly.

I've read many articles which decry the quality of 128Kbps encoding, most of which don't even bother to differentiate between MP3 and AAC. And yet my own testing, while not rigorous, has demonstrated to my satisfaction that most people, even those who say they can tell the difference, can't.

That is, people know there is a difference when two samples of the same song are played, but are as likely to pick the 128kbps AAC version as "superior" than the original CD. Not just on headphones or computer speakers, either, but on my decent home stereo.

Sure, a much more expensive stereo might make the difference even more pronounced, but it still probably wouldn't make the average person on the street any more likely to pick the original over the compressed version.

P.S. I blame FM radio, and over time I suspect my results will change.

One point about about iTunes is it is a "two out of three" choice. What you lose in audio quality, you make up for in convenience.

If I want to quickly find a particular track in iTunes (out of the approx. 60 gb of MP3 tracks I have on my server), I just type into the search field. If I want to do a theme playlist, it only takes a couple of minutes.

Now if I want to do that with the thousands of CDs and LPs I have, that will take hours because about a quarter of them aren't filed properly, and I don't have a catalogue index (now, did I file Little Richard under "L", "R" or "P"?).

Since convenience has a value, that more than makes up for loss in quality, and besides, I live downtown, where the ambient noise does far worse to degrade any audio experience.