Legendary artist Neil Young at the AllThingsD media conference Tuesday in Laguna Niguel, California. Photo: Asa Mathat/AllThingsD

Neil Young is right: Those songs on your iPhone do sound like crap, and it’s time we demand better-sounding alternatives for our digital music.

Speaking at the D: Dive Into Media conference Tuesday, the outspoken musician expressed his deep dissatisfaction with the MP3 format and called for an end-to-end reboot of the consumer digital audio ecosystem, from file formats to playback devices.

Young’s big beef: Digital music files download quickly, but suffer a significant loss in quality. Bitrates for most tracks on iTunes average 256kbps AAC audio encoding, which is drastically inferior to the quality of recorded source material in almost every case. By Young’s estimation, CDs offer only 15 percent of the recording information contained on the master tracks. Convert that CD-quality audio to MP3 or AAC, and you’ve lost a great deal of richness and complexity.

“My goal is to try and rescue the art form that I’ve been practicing for the past 50 years,” Young said. “We live in the digital age, and unfortunately it’s degrading our music, not improving.”

Young is giving a popular voice to a problem that audiophiles, recording artists and even careful listeners have long felt — that the MP3s in your iTunes library don’t do the original recordings justice. They’re not as good as the CD version, and far inferior to an analog source like a high-quality vinyl pressing or original master tapes. But for most of us, MP3s are good enough.

But MP3s weren’t good enough for Steve Jobs. According to Young, even Jobs himself wasn’t satisfied with the sound quality of the iPod. The late Apple CEO, famously a music-lover and audiophile, preferred to listen to vinyl records instead of digital files. Young’s anecdote underscores what music geeks have been saying for a decade: The iPod isn’t an audiophile device, and hardware and software have reached the point where we can build something better.

Until that mythical device arrives, you can achieve a level of audio quality that both Neil Young and your snotty friend with the $ 20,000 stereo can get behind. You’ll have to sniff around a little to find the files, and you’ll have to invest in special software and hardware to listen to them. It’s all a matter of how far up the quality ladder — and down the audiophile rabbit hole — you want to go.

Here’s a range of options, from the lowest rung to the highest.

MP3 and AAC — If quality is a concern, but if you crave the convenience of MP3, you can always set iTunes to rip at the highest possible bitrate of 320kbps, which most people consider indistinguishable from CD-quality audio. However, some people will still find this level of quality unacceptable.

FLAC and Apple Lossless — While MP3s and AACs are “lossy” compression formats (so called because the MP3 creation software removes audio information to keep file sizes down), you can also play “lossless” songs in iTunes and on your smartphone. Lossless files are much bigger (several times larger than MP3s) but the file retains more audio information and the quality is at least as good as a CD.

The iTunes software can play Apple Lossless (ALAC) files, and you can rip your CDs to Apple Lossless inside iTunes. However, you can’t buy ALAC files from the iTunes store. Not yet, anyway. The copyright holders may loosen up soon and allow the major digital outlets to start selling lossless digital files.

For now, if you want to purchase lossless files, you have to buy music encoded as FLAC (Free Lossless Audio Codec), an open-source format that’s very popular among audiophiles. It can handle 24-bit audio, which is the same resolution at which most bands record their albums these days.

You can buy FLACs at online warehouses like HDtracks, the largest store with the biggest catalog. The files are more expensive — a FLAC version of John Coltrane’s album A Love Supreme will cost you $ 18 on HDtracks, as opposed to $ 10 on iTunes. And they’re larger too. However, the FLAC version of the album is encoded at a resolution of 96kHz and 24 bits, which is higher quality than a CD and much, much higher than MP3s and AACs.

Now, you can’t just drop those FLAC files into iTunes. You need special software to play FLACs, like Foobar2000, VLC or Cog. Alternatively, some consumer hardware players can handle the format, like Logitech’s popular line of Squeezebox devices and players from Olive.

While FLAC files are capable of holding very high-resolution audio, the quality you get in your digital download is solely dependent on how good the source material is. For that reason, one of the ways to ensure you’re getting the best quality audio is to buy FLACs directly from the artists or labels themselves. Sites like Bandcamp.com allow artists to sell FLACs directly to fans. Linn Records sells very high-resolution FLACs of its releases. And if you go to George Harrison’s website, you can buy a copy of All Things Must Pass in 96kHz/24-bit FLAC for $ 30.

WAV — Some purists will tell you to skip FLACs altogether and just buy WAVs. Unlike a FLAC, which has been squished down, a WAV file is an uncompressed representation of what the artist recorded in the studio. By buying WAVs, you can avoid the potential data loss incurred when the file is compressed into a FLAC. This data loss is rare, but it happens. Almost any software audio player (including iTunes) can play a WAV, but higher-resolution WAVs will require special software, so do your research.

Direct Stream Digital — The Direct Stream Digital (DSD) format was developed by Sony and Philips, and is the native format found on the company’s Super Audio CDs (SACD). DSD recording equipment can capture 2.8 million samples per second, which is 64 times the sample rate of a regular CD. Proponents of DSD will tell you it’s the closest thing to analog tape available.

If you want to download DSD files, your options are slim, but growing. Sites like DownloadsNOW.net and E-Onkyo Music from Japan offer DSD files for sale. The files are huge and pricey — around $ 4 or $ 5 per track — but the software and hardware options for playing them are actually quite accessible.

There’s a free player made by Korg called AudioGate. It will play DSD files or convert them to any format you want. You can also use AudioGate to burn DSD data disc that will play in the PlayStation3 (Yes, the PS3 has the hidden feature that plays DSD files — read all about it at ps3sacd.com). Other manufacturers are ramping up support for DSD, but most of the playback hardware still only exists on the high end, selling for $ 2,000 and up.

For more info, visit the DSD-Guide website.

Vinyl — In Tuesday’s rant, Neil Young let slip the surprising fact that Steve Jobs preferred to listen to vinyl around the house, leading us to believe that even the man credited with spearheading the digital music revolution was unhappy with the results.

Whether a vinyl copy sounds better than a digital copy is one of the oldest debates among audiophiles. The truth is influenced by a number of factors.

First, there’s the source material — the tracks the band laid down in the studio, and what medium they used to capture the performance. Was it analog tape? Then a vinyl pressing of that performance will probably sound better than a CD. Was it a laptop recording at 24-bits? Then a high-resolution digital copy can equal the quality of the source. Second, how good is the pressing? A clean, 200-gram vinyl disc sounds vastly superior to a thin, flimsy disc, even when the same source material is used. Third, there’s your equipment. Steve Jobs’ stereo was probably pretty kick-ass. How good is yours?

It’s likely Steve and Neil were reminiscing about the classics — The Beatles, old Dylan, recordings that were cut to analog tape. In those cases, a quality vinyl record would sound better.

If that’s the level of quality Neil is striving for, it’s attainable. The hardware exists, the software exists, and the file formats exist. But the details of how everything fits together are still murkier than those MP3s of Harvest Moon you found on Napster.

Gadget Lab