What is the real difference between lossy and lossless music streaming?

The real difference is whether anything is thrown away. Lossy compression uses inexact approximations and partial data discarding to represent content, while lossless compression, which is reversible, does not degrade the data. The price of keeping everything is size: the reduction possible with lossy techniques is much higher than with lossless ones.

AAC, which streaming services such as Spotify and Apple Music support, is a lossy standard. It was designed as the successor of MP3 and generally achieves higher sound quality at the same bit rate. Tests of MPEG-4 audio showed that AAC meets the ITU's requirements for "transparent" quality at 128 kbit/s for stereo. Well-designed lossy compression often reduces file sizes significantly before degradation is noticed by the listener. FLAC is the best-known lossless alternative: typically it reduces audio to between 50 and 70 percent of its original size, and it decompresses to an identical copy of the original audio data.

Lossless streaming has had a stop-start history. Spotify announced a HiFi tier with lossless sound in February 2021, delayed it indefinitely in January 2022, and in September 2025 announced that Lossless would roll out to Premium listeners in more than 50 markets.

One rule follows: lossy is a one-way trip. Data lost to lossy compression cannot be recovered, even if the file is compressed losslessly afterwards, and repeatedly compressing and decompressing makes a file lose quality, which is called generation loss. So it is advantageous to keep a lossless master from which to make copies.