Seems like a lot of CD music nowadays is compressed a little more than what audiophiles and other discerning listeners would like. I suppose it's because a lot of the mainstream recordings are aimed at an FM and MP3-type audience.
Live music is uncompressed, of course, and a live recording will usually be pretty faithful to the recorded event. Compressing the dynamic range of the recording, however, robs some of the emotional impact of the music. The music becomes less engaging and more susceptible to listening fatigue.
Music played in the home can become even more compressed by the playback system. Boomy bass, acoustic room reflections, loudspeaker driver limitations, cable insulation, restrictive power conditioning, too much EMF suppression, and low-level grunge are among factors that can reduce the dynamic impact presented to the listener. You want the music to sound "live" and not "canned."
Much can be accomplished with attention to acoustic factors like speaker placement and room treatments. Perhaps just as significantly, attention to component isolation.
Much of the emotion and impact of live music is not strictly because of contrast between the highest and lowest volume levels. It's in the low-level resolution: the simultaneous sustain and decay of a note; subtle inflections, both vocal and instrumental; the ambiant reverberations within the physical environment. Low-level information also has a profound effect on the high-volume passages in music. A dominating musical riff will sound more "canned" if its tonal crest is contaminated even slightly with fuzz or glare.
Isolating components from micro-vibrational influence helps reduce fuzz, glare, and other anomalies, freeing more of the low-level information to reveal itself. The subsequent increase in focus and clarity is equivalent, to the listener, to an increase in dynamic range, virtually "uncrompressing" the music to a degree. Compressed music tends to deliver the necessary punch and spunk. If not too overly compressed, it can also provide enough emotional ambience for a compelling listening experience.
SteveHerbie's Audio Lab