Sound can be recorded and stored and played using either digital or analog techniques. Both techniques introduce errors and distortions in the sound, and these methods can be systematically compared. Musicians and listeners have argued over the superiority of digital versus analog sound recordings. Arguments for analog systems include the absence of fundamental error mechanisms which are present in digital audio systems, including aliasing and associated anti-aliasing filter implementation, jitter and quantization noise. Advocates of digital point to the high levels of performance possible with digital audio, including excellent linearity in the audible band and low levels of noise and distortion.

Two prominent differences in performance between the two methods are the bandwidth and the signal-to-noise ratio (S/N ratio). The bandwidth of the digital system is determined, according to the Nyquist frequency, by the sample rate used. The bandwidth of an analog system is dependent on the physical and electronic capabilities of the analog circuits. The S/N ratio of a digital system may be limited by the bit depth of the digitization process, but the electronic implementation of conversion circuits introduces additional noise. In an analog system, other natural analog noise sources exist, such as flicker noise and imperfections in the recording medium. Other performance differences are specific to the systems under comparison, such as the ability for more transparent filtering algorithms in digital systems and the harmonic saturation and speed variations of analog systems.

The dynamic range of an audio system is a measure of the difference between the smallest and largest amplitude values that can be represented in a medium. Digital and analog differ in both the methods of transfer and storage, as well as the behavior exhibited by the systems due to these methods.

The dynamic range capability of digital audio systems far exceeds that of analog audio systems. Consumer analog cassette tapes have a dynamic range of between 50 and 75 dB. Analog FM broadcasts rarely have a dynamic range exceeding 50 dB. Analog studio master tapes can have a dynamic range of up to 77 dB. An LP made out of perfect vinyl would have a theoretical dynamic range of 70 dB, though measurements indicate actual performance in the 60 to 70 dB range.^{[failed verification]}

Compare this to digital recording. Typically, a 16-bit digital recording has a dynamic range of between 90 and 95 dB.

The benefits of using digital recorders with greater than 16-bit accuracy can be applied to the 16 bits of audio CD. Meridian Audio founder John Robert Stuart stresses that with the correct dither, the resolution of a digital system is theoretically infinite, and that it is possible, for example, to resolve sounds at −110 dB (below digital full-scale) in a well-designed 16-bit channel.

There are some differences in the behaviour of analog and digital systems when high-level signals are present, where there is the possibility that such signals could push the system into overload. With high level signals, analog magnetic tape approaches saturation, and high-frequency response drops in proportion to low-frequency response. While undesirable, the audible effect of this can be reasonably unobjectionable. In contrast, digital PCM recorders show non-benign behaviour in overload; samples that exceed the peak quantization level are simply truncated, clipping the waveform squarely, which introduces distortion in the form of large quantities of higher-frequency harmonics. In principle, PCM digital systems have the lowest level of nonlinear distortion at full signal amplitude. The opposite is usually true of analog systems, where distortion tends to increase at high signal levels. A study by Manson (1980) considered the requirements of a digital audio system for high-quality broadcasting. It concluded that a 16-bit system would be sufficient, but noted the small reserve the system provided in ordinary operating conditions. For this reason, it was suggested that a fast-acting signal limiter or 'soft clipper' be used to prevent the system from becoming overloaded.

With many recordings, high-level distortions at signal peaks may be audibly masked by the original signal; thus, large amounts of distortion may be acceptable at peak signal levels. The difference between analog and digital systems is the form of high-level signal error. Some early analog-to-digital converters displayed non-benign behaviour when in overload, where the overloading signals were 'wrapped' from positive to negative full-scale. Modern converter designs based on sigma-delta modulation may become unstable in overload conditions. It is usually a design goal of digital systems to limit high-level signals to prevent overload. To prevent overload, a modern digital system may compress input signals so that digital full-scale cannot be reached