What is the best compressed iTunes format?


First, let me state that I fully understand that an uncompressed format is far superior to a compressed on such as MP3. My current iPod is a 4GB unit, but I just had the battery replaced on my wife's old 30GB unit and plan to transfer my music that direction.

I generally use it for listening at work on Sennheiser earbud headphones that retailed for about $80 new so we're not talking HiFi. My only iPod connection currently, or planned, to my main stereo is via an Onkyo dock so I'm not getting the benefit of an external DAC so again we're not talking HiFi.

Knowing that I have somewhat limited space, what would you recommend for me to choose as the format for iTunes. I've never done anything beyond one of the lower compression MP3 options, is there something better?

Please provide a suggestion and why.

Thanks
mceljo
Mezmo,

If I were planning to rip everything again from scratch I'd probably take your advice. I don't do anything, at this point, on my main system outside of my CD player so having the lossless files isn't an issue right now. I'm just planning to rip my new CDs in Apple lossless and will go back to "upgrade" only a select few of the ones that are already ripped.

I didn't realize that I could down covert to the iPod, that's a great feature. Thanks!

I'm planning to rip a couple of songs in multiple formats and do some comparison listening on my headphones. We'll see how strong the placebo forces are soon enough.
Yea, I've ripped 500-plus CDs twice, and don't recommend it one little bit. Unless you're either starting from scratch or really biting the bullet for a total conversion to a computer-based source, no reason at all to redo everything. Sounds like you've got the perfect plan. Cheers and enjoy.
Rip without any compression and then create separate libraries for iPod compressed files. It will save you the time and effort of ever having to re-rip as your library evolves. I believe this is along the lines Mezmo suggested.
Apple AAC and apple lossless both use mpeg4 compression, apple lossless is simply compressed at a MUCH higher bit rate, and its variable compression. If you get into the specs, apple lossless has a bit rate of anywhere from 600kbps to 1100kbps, + or -, depending upon the track. AAC only goes up to 320kbps. AIFF is ripped at 1411kbps, which tells me that its a more true lossless format than apple lossless. I don't have any WAV files.
Your optical drive and the ripping software you use matters more than which file format you pick (AIFF, WAV, FLAC, etc.) when talking about bit-perfect rips.
I have Audio Tecnica earbuds, which are OK, not great, and I can hear the difference between a 320kbps rip into .mp3/AAC, and a 1411kbps rip into AIFF. More frequency extension and detail. I only rip AIFF and apple lossless, I avoid the lossy formats. Can I hear the difference between AIFF and apple lossless? Not really, not with the earbuds. If I went from my laptop through a DAC into my system, maybe. I recommend apple lossless, its a great middle ground. I don't want to listen to my favorite music at work knowing that I am missing something in the sound because the file format is clipping the waveform.
With an ALAC file...(Apple Lossless), you can reconstruct a bit-accurate copy of the original file.
Than the conversation turns to the speed / accuracy of the reconstructing computer.

The quoted bitrate (above) would seem pretty spot on. Very complex music will run 1000+ while music of low complexity dips below 600, but rarely.
Check out a copy of a CD in ITunes to get the idea. Part of the listing for a sony recorded in ALAC is its bitrate.