Agree with Zd542. If you read the multi-part series in The Absolute Sound a year or so ago you realize quickly that EVERYTHING matters -- including computer settings, recorded format, and things you'd never think would affect sound quality. So I'd be very careful before making any judgement using that format (not sure Flac is considered one of the best encoding formats either, which goes again to the point that everything matters). Also, and although I don't usually put too much stock in reviews, you should read some reviews and see if any reviewers also found the DAC8 to be bright through its USB input. If not then the issue may very well be your setup and not the DAC. Best of luck.