I have an app that captures a bit-perfect copy of the Google Play stream. The Google file properties claim to use version 3.98 Lame encoder at CBR 320 kbps. In all of the ABX testing that I have done, I was unable to hear a difference between the Google files and my own ripped versions from a CD to FLAC or using Lame 3.99r at VBR -0. (I've used Exact Audio Copy or dBpoweramp for the CD rips)
For the most part, provided your internet is not struggling, it is trivial to stream these mp3 files without any issues.
I am able to identify a difference between a Tidal FLAC and a Tidal AAC 320 track in their online test 100% of the time when I have done this test at home with my Denon D5000 headphones. It seems that Tidal is intentionally modifying the AAC files so that the bass and treble are slightly weaker. More information can be found in this thread:
http://www.head-fi.org/t/743658/tidal-lossless-listening-test-whats-going-on-here
I could not hear a difference between the Tidal FLAC, my own rip of the same CD to FLAC, or the Google Play streaming mp3 file.
So, I've drawn my own conclusions about Google music streaming. It is my main player. I have 2 different Chromebooks that I use as jukeboxes connected to my audio systems. I've added my own ripped mp3 files to Google to fill in the gaps with artists and songs that are not currently available to stream on the subscription service.
There are 35+ million songs available, and there are bound to be a few poorly encoded versions out and about, and sometimes the internet acts up, but I have no serious, longstanding problems to report in my 2+ years of experience with the streaming service. (I pay $7.99/month in the US since I signed up before June 30, 2013)
I've subscribed to Rhapsody, Spotify, and MOG for multiple years in the past. The interface is outstanding with Google, and the sound quality is transparent, when compared to a CD, to my ears.
I would only download songs if I was planning on being in the boonies or out of the country for several days. Everywhere I normally frequent where I would listen to music has good internet service that I can use. Streaming is a viable solution for me. I honestly don't believe that I am sacrificing any sound quality.