In my review of my Meridian F80 HiFi below, I commented on it having an optical input as a factor in my buying decision - meaning I could feed it digital files from a computer or music server, rather than CDs. I was already thinking about moving to lossless computer-based music storage at some point and have since then bitten the bullet to arrive at the system pictured above.
The music server is an Apple TV (the silver box on the right) with a 160GB internal hard drive for media storage. This has been 'hacked' with aTV Flash software to allow adding an external hard drive for more storage - which I'll need soon as I'm making good headway in loading my whole CD collection onto the system (tedious). The Apple TV is linked to my WiFi network via an Airport Express device (the built-in WiFi functionality in the Apple TV works very poorly), allowing me to administer it via iTunes and load new music into the system from CDs or downloaded from other sources. Music selection can be done via an infra-red remote control using a visual interface on the TV screen, or on the wonderful WiFi remote control app that Apple provides for the iPhone, iPad or iPod touch devices (this works beautifully for browsing or searching your music collection).
The Apple TV is linked via an optical (digital, thus) cable to the Meridian F80's digital input - at which point its DAC takes over and the system plays back the music just as if it was coming from a CD. Using lossless files, the sounds quality is (to my ears at least) indistinguishable from the original CD - and the convenience of having your whole music collection immediately accessible from your remote control is killer.
A few points that might be of interest or help to others building (or thinking about building) such a system:
Though my computer and WiFi network are necessary to get new music onto the system, once it's there it can operate without either - I think this is highly desirable. No streaming or network-dependence to screw up sound quality here.
The Apple TV can suffer occasional 'hiccups' in playback if it is called via the network - as far as I can tell, this occurs only if the music library is synchronised while playing back (so easy to avoid).
The Apple TV offers a lot of extra functionality using it's WiFi/internet connection like watching YouTube videos, podcasts, internet radio etc. These are nice to have.
As my control system for loading music is an Apple computer running iTunes, I've stuck with Apple Lossless as the format for my music library. This gives a well-integrated system, at the cost of using a proprietary commercial format that not all systems support. If this is an issue for you, you might want to look at using another lossless format (though conversion is relatively trvial).
There is still a frustrating lack of lossless-quality music available purchasable for legal download. The iTunes store, though wonderfully convenient, offers everything in 256kbps compressed AAC format - not good enough IMO. Some of the classical labels - Naim, Linn, Chandos, Gimmel etc. are making headway in offering CD-quality (or higher) downloads and ventures like the Bowers and Wilkins 'society of sound' music club offer alternative sources, but often the only way to get a lossless recording onto your music server is to go out and buy the CD, then rip it yourself. Pretty idiotic, as much as I like CD shops and wish to support them.
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