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It will stream mp3 as mp3s, unless you have set it to transcode mp3s in the options. See the options file mt-daapd.conf.

And based on network performance it is preferable to stream mp3s over apple lossless. SImply a lot less bandwidth needed. Whether streaming apple lossless works will depend on what bandwidth you effectively have between the server and the client and who/which applications use bandwidth also.

Typically mp3s can be easily streamed. Apple lossless and wavs only when bandwidth is good.