Technically ALL digital media will be lossy, as the standard 44.1KHz/16bit/2 channel/65536 level CD encoding gives an overall data rate of 1.4112 Mbit/sec.
Adaptive rate codec offer the better space/quality comparison but aren't so portable.
These rely on lower quality levels where the sound waveform is simple and then get more detailled (i.e. higher bit rate) when required.
Karl is right, at least when it comes to copper interconnects (although using the really high-end stuff does give a noticable difference). I noticed a huge difference when I swapped the PC->6.1 audio system to using a NLOC fibre interconnect. The bass was a lot richer (and seemingly more varied) and gained more differentiation in the higher ranges too.
*disclaimer* Above observations may only be in my head
