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Link: http://www.macworld.com/article/138386/2009/01/listenshutup.html
MacWorld has an interesting post on audio quality in the digital realm. Worth going through are the reams and reams of reader comments at the end.
My personal take:
While bitrate may matter, the quality of the encoding algorithm matters more as does the tonal range of what's being compressed. When I first started converting my CDs to MP3, I was using 128 kbit. It was very clear that the older, less refined MP3 encoders did a rather poor job compared to current ones. My MP3 collection has not been entirely resampled from when I first began, and even on the old $40 Creative PC SoundWorks speakers, I can tell the age of the file. Flanging on high pitched or staccato notes are particularly obvious, as is the muted quality on some tracks which end up sounding muddy and distant. The newer rips however sound as good on a decent home theatre as the original CD recordings (in this case, VBR method New high quality joint stereo MP3 generated by LAME 3.98 via iTunes to an Airport Express played back via optical out to a Sony (*) amp over a pair of Nuance(**) tower speakers.)
I never had a record player in perfect condition nor the high quality speakers required to show it off to the optimum level so I can't really comment on the continuous wave versus the sampled waveform argument. What I can say is that the vinyl records I did (and actually still do) own have warped, scratched, got dusty and damaged within days of purchasing. Arguments over the purity of analogue vinyl over digital CD therefore have very little interest to me beyond a vague theoretical value.
(* Yes, I know that some people think they're substandard rubbish.)
(** Yes, I know that some people think they're substandard rubbish.)