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Does bit rate on itunes matter?

There is an option on itunes that will convert all the music to 128 bit rate kbps AAC

i would like to use it as i have a 8 gig ipod and 22 gb of music

does it make the quality sound horrible? have you done it? does it really matter? or is it like the difference between an hd tv and a regular

basically, is it worth it for me to make them into 128 kbps AAC?

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