YouTube uses lossy compression, and a pretty low bitrate one. Not only that, but what the users often upload is already lossy, and YouTube converts that, so you're getting lossy compression on lossy files which makes things worse.
HD quality video uses a higher bitrate compression (720p and 1080p) so watch things in that.
The best way to get audio is to buy it. CDs and lossless downloads are better than stuff from Amazon and iTunes, too.
If an artist offers a free download and I take it, even if it's a low bitrate file it sounds noticeably better than a direct YouTube rip. And I'm usually skeptical of anyone who can tell the differences between bitrates. It's that bad.
Edited by Head Injury - 12/18/11 at 11:59am