Playing music wirelessly from itunes using a Digital to Analogue Converter

Hi, i new here so bear with me!! I have an ideal setup I wish to have but wondered if it's at all possible with Apple hardware.
I have an extensive library on Itunes in Apple lossless format stored on an external hard drive and wish to stream it to my hifi using a DAC, the server needs to have either an optical and digital SPDIF coax output or 2 USB outlets which carry a digital audio output. Is this at all possible?
I don't wish to go down the Squeezebox route due to the format my library is in.
Many thanks.

You can use an airport express to stream your music from an iTunes library (or a iOS device)using airplay. Airport express has an optical digital output which is capable of 44.1/16 (CD quality is you have lossless files). I have it hooked to a musical fidelity dac and control playback through the apple remote application in my ipad. You can no distinguish in a/b comparisons with a good CD player, and my rig is quite high-end.
I know iTunes streams 44.1/16. Not sure on what's the quality of streaming from an iOS device. It does sound poorer to my ears, but...

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Can I play music wirelessly from my Imac to my hi fi?

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Yes, AUX in jack. Radio shack may be required to make sure your connectors are compatible. For example, you may need a standard RCA splitter to mini-RCA. The mini-RCA (3.5mm) is for the airport express while the dual (red-black) for your AUX in. Hard to say without seeing the connectors.
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If anyone can help i would be hugely grateful, I'm literally pulling my hair out.
I bought the Airport express so i could surf the web and wireless play music through my stereo simultaneously. Can I do this? I've managed to play music wirelessly from my macbook to the express/stereo, however i cant surf the web because i can only presume i haven't set up the express to join my sky network. So therefore the only way to surf the web at the moment is swap wireless devices from express back to my current sky network, then the airplay stops obviously.
I've tried to join the express to my sky network/netgear router, at face value it looks simple. The sky network name automatically comes up and then all i have to do is select the correct wireless security which i haven't got a clue which one my sky/netgear router is using, then type in the password which i presume is the network key number on the back of the netgear router? However its not connecting?? I am doing something wrong?
Can someone please give me some guidence on how to connect express to my current network?

and then all i have to do is select the correct wireless security which i haven't got a clue which one my sky/netgear router is using
Suggest that you ask Sky what type of wireless security that is used on the devices that they provide.
Once you have that information, you can choose the correct matching setting when you configure the AirPort Express to "join" the Sky wireless network.
The "password" would be the normal phrase that you use to connect to your wireless network at the present time.

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The following article(s) may help you.
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I currently have a MacBook Pro and a iPhone and would like to back-up and print wirelessly as well as playing music wirelessly from my Mac and iPhone.
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Am I right in thinking that ..
Also, if this is the case, is there any advantage the Time Capsule has to any other WiFi external hard drive?
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Playing music wirelessly from itunes using a Digital to Analogue Converter

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