Do I need a DAC?

Oscarrr, DAC will give you cleaner sound. You might not care but noise embedded in music will screw up other things like for instance imaging. Noise on analog side is caused by the jitter on digital side and is detectable by lack of clarity only (since it is proportional to sound level). Your AE, according to Stereophile measurements, has decent/average jitter (258ps) on digital out but really bad jitter artifact on analog out, equivalent to 2.4ns - almost 10x worse. Read this: http://www.stereophile.com/digitalprocessors/505apple/index.html

Even with 258ps jitter you would be better off to place reclocker between AE and the DAC. AFAIK jitter becomes inaudible below 50ps (peak-peak) but it is a matter of individual hearing. Studio engineer or symphony orchestra musician would be more likely to detect lack of clarity.

The DAC in the Airport Express is low quality. I agree with Mesch that it's your weak link. I'm sure your system is capable of showing an improvement, but whether you can hear it is the question. I was in your shoes a few years ago and I replaced an AE with a MHDT Paradisea. The Paradisea was noticeably smoother and more enjoyable. It wasn't a radical change, but the sound was less fatiguing and more natural. Initially, I continued to stream from a laptop to AE to DAC. I loved the convenience, but I continued to look for ways to improve things. I stumbled into a Stereophile review of the Airport Express that made me realize the AE was adding jitter and distortion. Eventually, I replaced it with a Mac Mini connected to the DAC with an optical cable. The change wasn't radical, but I noticed a more cohesive sound. Eventually, I realized the Paradisea was my weak link. I wanted more resolution, so I replaced it with a Bel Canto DAC3. That was a big leap forward, but at 4 times the cost of the Paradisea. I could go on with my personal experience, but my point is that improvements usually aren't huge. They are often subtle, but they accumulate over time and suddenly your system is at a new level. It's very cool to see that kind of change. You don't have to be OCD to hear the difference.

There are lots of great sounding, low cost DACS like Musical Fidelity VDac, Cambridge DacMagic, HRT Music Streamer, PS Audio Digital Link III, etc. That's where I would start if I were in your shoes.

A free thing you can do to get better sound is to rip your music in AIFF if you're on a Mac or WAV if you're on Windows. A good article on the differences: What’s the Difference Between All These Audio Formats?

I hope this helps.

Format cannot make any difference as long as it is lossless (bit perfect). Information is transferred as data in packets over Wi-Fi without timing. Timing (clock) is recreated in AE. If you ever decide to use lossless then perhaps the best format is ALAC since Itunes uses it to transfer data to AE, otherwise it has to compress to ALAC - additional operation but it doesn't make any difference because your computer is fast enough anyway (ALAC saves you disk space). I use jitter suppressing Benchmark DAC1 with AE but sound of Benchmark might be not to you liking (neutral and not warm). Combination is as clean as it gets.

I have to warn you that since clock is recreated in AE, without music clock drops. As a result of that some DACs "eat" beginning of each song with AE. Remedy is to use "crossfade" in Itunes. My Benchmark DAC1 is fast enough to sync again but you might scan this forum to find out if the problem exists with particular DAC that you have in mind before investing money.

>256kbps is very good and you'll notice big difference with DAC. Additional reclocker should give you a little more, even with 256kbps.

"Zd542: So in your opinion, a DAC isn't needed as long as I mostly play 256/320kbps files from iTunes?"

Maybe. I think a better way to put it is that you will get more out of a new dac if you are feeding it better quality music. Even playing mp3's through a new dac, though, will probably sound better just because of the fact that the analog portion of the unit will be of a much better quality.

In my first post, I recommended that you try bypassing the preamp section of your NAD. I would try it if you haven't already done so. Seeing how big the difference and what the difference is, may give you some insight on how to proceed.

You could always just try a DAC and see if it does anything for you. Amazon sells several, to include Peachtree, Schiit, Musical Fidelity, etc. Just check the return policy for the vendor that you buy from. I believe that Wyred4Sound has a home trial program as well.

If you have the money to spend, I really don't think that getting a decent DAC can be a bad choice. It's more than likely that you will get at least some improvement. The question is one of how much.

As has been mentioned, you have a decent integrated and good speakers. All it would take for you to really get a bit more enjoyment out of the system would be to get a DAC and rip your CDs in a lossless format.

I'm not an audiophile and don't chase incremental increases in quality (although I'll take them if they pop up), but I never realized how enjoyable listening to music can be until I heard it through a decent system.