Do you need a DAC for internet radio only?

Dogmcd,
Is the DAC a big improvement for the internet source as well as the CD's?

To my ears, yes it is, as long as the internet source has a high enough bit stream. If you're listening to stations that are broadcasting at about 64kbps or below, then quite honestly, nothing will help much. However, when you get into higher speed transmission (especially ones that are at 128kbps...), then you're practically getting CD quality sounds, and I've found that a DAC is the way to go. The nice thing about the Squeezebox software is that it shows you the bit rate of channels as you browse through them, which makes life pretty easy. I also keep a listing of most of the major internet radio providers in my favorites on my PC as well just so I can go through and browse things and then go to the Squeezebox and dial up what I'm wanting to hear.

Make sure you get a decent cable between Squeezebox and DAC as well. I'm a big fan of PNF Audio cables and have both their coax and toslink. Both work great from the Squeezebox to DAC. Now, there may be some depedancies on the rest of your system, but if you have even a good budget rig I think you'll notice an improvement in sound quality. What I hear is better tonality and much improved imaging with a noticeable increase in the "air" around instruments, making them sound much more real. Bottom line is that a DAC in the chain is definitely a plus IMHO!

Have fun and enjoy your music!

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Drubin, if you like jazz, there are killer stations in Switzerland, Spain, Japan, Brazil and France that are broadcast over the web that sound fantastic. Lots more jazz stations around the globe that are available to you. Just do a web search of "internet jazz radio stations."
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I have a squeezebox (Benchmark dac) and have no drop out/buffering issues w/internet radio. While I wish they were wav files, they actually sound decent through the dac. Better than mp3's, which they are. W/o the dac...they sound like mp3's.

Thanks everyone. I think I'll start with the SB only, play around with the Internet radio, rip a few CD's, save up some money and of course, unable to help myself, buy a DAC!!!