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Better Sounding Digital Audio on a Budget

NEW YORK ( TheStreet) -- The digital music files you can buy from services like Apple's (AAPL - Get Report) iTunes and Amazon  (AMZN - Get Report) and other suppliers are strictly "low-fi," but there are also companies that offer much higher-quality music downloads.

High-resolution files are larger and take up more space on your hard drive but sound like real music under the right conditions. Hold that thought.

Thanks to firms such as, Blue Coast, B&W, Linn and Rhino, you can now listen to high-quality music files which sound like, well, music the way recording artists want the music to sound. That's why rocker Neil Young says he's creating another new service, Pono, to play his version of these new hi-res music files.

In technical terms a compact disc contains PCM (Pulse Code Modulation) files with 16-bit, 44.1K (commonly described as 16/44) resolution. The MP3 files sold by Apple, Amazon and others are of much lower quality.

The files you can download from the five newer companies listed above are 24-bit/96K (24/96) up to 24/192. Even higher-resolution files are on the way.

Unfortunately, desktops, laptops, tablets and smartphones are designed to play the low-res stuff. But those devices are capable of much more though new products. Better digital-to-analog converters (DAC) are now available to help play hi-res files at full fidelity.

A DAC connects your computer to your music system, usually through a USB port. They come in many shapes and sizes. You can spend thousands on a standalone DAC. I'm going to tell you about a number of great sounding DACs I've been listening to which cost between $100 and $300.

We'll start at the lower end of the price range. The sound coming from the $99 Schiit Audio Modi belies its low cost. Yes, that's the company's name. And yes they did it on purpose to get attention. The company's products though are anything but.

Jason Stoddard and Mike Moffat, the men behind the company, have a long list of audio industry credits. Their products include DACs and standalone headphone amplifiers priced from $99 to $749. All of their products are designed and manufactured in California.

The Modi standalone DAC converts digital music files as large as 24/96. No special software drivers are needed. Plug the Modi into the USB port and your computer will recognize and install it The device gets its power from the USB connection. The DAC works with popular Mac, PC and Linux music playback software such as iTunes, Foobar and J-River.

I've listened to the Modi for weeks at a time and can happily report that music sounds amazing running through it. Everything from MP3s, radio station streams and Spotify sounds much, much better than listening through the computer's headphone output.

I spend a lot of time listening to WBGO the jazz radio station from Newark. I used to be able to receive its broadcast signal perfectly until they moved the antenna to midtown Manhattan one year ago. Now the only way I can hear the station is via a Web stream. I'm now quite happy listening to WBGO through the Modi and my stereo.

I've also had the pleasure of auditioning the company's $349 Bifrost DAC. It's even more amazing sounding but three-and-a-half times the price.

Schiit also makes a new, special little DAC it calls Loki which handles a different digital file encoding format (Pulse-Density Modulation). It was originally designed by Sony  (SNE) and Phillips (PHG) to improve upon the compact disc. They named their new technology Direct Stream Digital (DSD) and the new discs Super Audio CDs (SACD).

Although SACDs sounded better they couldn't be played on CD hardware at the time. SACDs required new devices to hear them. The format never really took off.

But now, with new technological breakthroughs, DSD files can be played on computers using USB connections. The Loki allows you to do that. PCM files can also be played through a Loki

Loki requires a very different computer playback set-up. But if you follow the explicit online instructions you'll be rewarded with what I found astonishingly great music reproduction. At the moment the are only a few Websites offering DSD music files. Some allow you to download free samples. But what you can listen to sounds incredible.

Schiit isn't betting the company on whether DSD will be a success in the future. The designers created the Loki to let customers hear what the format is capable of. And, they priced it just right. Loki sells for $149 on their Website.

-- Written by Gary Krakow in New York

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