Boy, do I sound like my parents with that headline, or what?
Apparently, two kinds of compression are changing the sound of recorded music. The first is digital compression, such as we use to get a bunch of mp3's on an iPod. I still buy CD's, and then rip them myself so I can control the bit rate and compression, but a lot of folks are buying mp3's online of all kinds of quality. (I actually rip every CD twice -- once as a VBR MP3 for my iPod and once as a loss-less FLAC file for my home audio server).
The second type of compression, perhaps more insidious because it is impossible for the individual listener to control, is use of audio compressors that reduce the dynamic range of music - basically making soft parts louder and vice versa. NPR discusses it here, via Flowing Data. While the second form of compression is as old as vinyl (the revenge of Phil Specter?) these two types of compression are related as apparently louder music gives more room to hide digital compression artifacts, so producers are compressing music and increasing loudness.
The best test I have of dynamic range is listening to music in a noisy car, say with the windows open. Many classical disks can't be listened to this way, as the variation from soft to loud causes one to keep having to fiddle with the volume knob. I have a few old rock disks that have the same kind of range (some old Genesis albums come to mind) but most of my newer disks will play just fine in a loud car, probably meaning that they indeed do have much narrower dynamic ranges.
To some extent, this is counter intuitive to me given the prevalence of headphone listening, since headphones are great for listening to music with big dynamic ranges. But what do I know? I grew up listening to 8-tracks so it all is an improvement for me.
Here is a very good, succinct example of how compression works and why it makes music suck: