I used to be a huge foobar2000 fan with a huge FLAC library. A bit later I got used to iTunes, because there was no good foobar2000 alternative on macOS, and I dialed back the library. Then I said fuck it and moved all the way over to Spotify, trading music quality (and UI) for discoverability. And I don't see myself going back.
My story is basically the same (except iTunes was mpd in my case) but I'm seriously considering moving back because of the music quality. I don't consider myself anything close to "audiophile" but the dynamic range of streamed music (at least for spotify) makes for a terrible experience when played at rather high volume over speakers. The difference to CD-ripped mp3 is immense. Messing with the few options offered by…
Anecdotally though Spotify's "Very High" quality works well for me and honestly in 99% of cases it is indistinguishable. My setup sure isn't the greatest, but I have a dedicated DAC, a headphone amp, and speaker amp with some reputable headphones and bookshelf speakers. I keep CD sourced FLAC files on a local disk but I never really play them anymore.
Maybe if I had large floorstanding speakers in the 1000$+ category there'd be a lot more cases where Spotify falls short - where the HiFi offering or local FLAC would have a strong case - but I certainly recognize it is a niche case.
[1]: https://newsroom.spotify.com/2021-02-22/five-things-to-know-...