There is an article at Slate about a newish technology that is going to make Internet radio sound better:
It's a given that fat broadband lines are the future of online media. But right now, for Internet radio, the future is about slimming down—creating skinny little streams of data that don't eat up too much bandwidth. The key is a new and better audio compression format called aacPlus, or sometimes HE-AAC, which has been chosen by the industry committee that standardized MP3 13 years ago (the Motion Picture Experts Group). If you've tried to listen to online stations, you know they sound grainy if they're streamed at any less than 128 kilobits per second—maybe 96 kbps if you're not fussy. That makes a broadband connection a must. But aacPlus sounds nearly as good as a CD, even when it's compressed enough to play through a dialup line. Don't take my word for it—see the results of the European Broadcasting Union's listener tests [I didn't link to this], in which aacPlus was deemed the "clear winner" at a dialup-friendly 48 kbps.
So the key to a fat sound is getting skinny? I guess irony can be pretty ironic sometimes.