
Hi Paul,
You are indeed correct quality of compression can be altered and it does directly effect the amount of memory used up. The quoted 13000 tracks is based on a very low compression rate on sony's hugely unpopular atrac format, the sound qulaity is decent but not outstanding and if this was to be the last jukebox you ever bought then it may be a viable option.
What I mean is ATRAC is likely to die out soon so if all you're music is stored in that format and then you buy a new player which will likely not support it you'd have to re-rip all your collection. As such you'd be better ripping in mp3 to ensure longetivity of your collection which will restrict you to 5000 songs at around 128kbps.
I would recommend ripping at 256kbps so perhaps a higher capacity player would be more suitable? Think 40gb - 60gb.
Hope this helps but let me know if I'm not making sense!