A reader sent in this comment on the quality loss (or lack thereof) when you convert iTunes AAC files into AAC files without the DRM:
In regards to your entry on the iTunes Music Store — I’ve been wanting to use the store for a while, but didn’t really want to pay for DRMed files (for reasons similar to the ones you mentioned). Just yesterday, though, I bought 14 tracks off the store, transcoded them to unprotected AAC (128kbit regular AAC files), and did some listening tests to see how much of an effect transcoding had. While I was at it, I also compared several of the tracks to CD-quality AIFF files. I did blind tests using playlists shuffled in iTunes — it was quite easy to set up. I chose tracks from a variety of genres to see if transcoding affected certain types of music more than others.
I found that with nice studio headphones on in a quiet room with the music volume set fairly high, I was almost always able to distinguish the protected AAC file from the (transcoded) unprotected AAC file. It usually took a minute or two of carefully listening and re-listening to bits of the tracks I was comparing to figure out which was the original, though, and even then I didn’t notice any significant differences — just a subtle difference in quality which gave me a “gut feeling” as to which was the original track. The difference between the CD-quality AIFF files and the AAC files was similarly subtle. The difference wasn’t enough that I’d ever notice a problem listening to transcoded AAC files with headphones.
When I did some listening tests through a pair of reasonable-quality speakers (and turned the iTunes “sound enhancer” on and up to medium) I was no longer able to tell the difference between tracks. I did several tests with a good-quality VBR MP3, a CD-quality AIFF, a iTMS Protected AAC, and a transcoded unprotected AAC, and I really couldn’t tell the difference between any of them. Mind you, I don’t have highly trained ears, and I’m not a serious audiophile, but I really only cared whether I could tell the difference, and I do definitely notice poor-quality audio.
After all this I decided to go ahead and start using the iTMS, as I can transcode all my AAC files to unprotect them and not notice a difference. Of course, the other key catch is that I have a way to conveniently transcode my AAC files — I’m using AAChoo and transcoding to 128kbit AAC using “best” quality encoding (which may require a Quicktime Pro 6 license?). I don’t know if there’s a way to do this conveniently in Windows; AAChoo uses Quicktime to do the transcoding, so it should be possible to do the same with Windows, but it may be that noone’s written a similar Windows program yet. AAChoo also doesn’t currently copy the ID3 tags from AAC files, so I’ll have to do that by hand (or figure out the tag format and write a script to do it for me).
Update: earlier I had posted that the writer had transcoded the files from DRM-encumbered AAC files to MP3 files, but that’s not correct. He transcoded them to AAC files without DRM.