WARNING: Major rant ahead. Noting personal meant towards anyone....
No, the file format won't matter if the arrangement etc sucks, but when he gets that fixed and does record it he needs to know that there's a dramatic difference between formats, and regular people can notice it.
IME, the only thing dramatic here is that statement. I guarantee you that I could play you a single file under those conditions and you couldn't tell me it's format reliably more than 50% of the time. In fact, I'll take it even a step further; I'd bet you I could trick you into choosing MP3 as your answer more than 50% of the time, through simple psychological manipulation. I'm not talking A/B comparison, I'm talking real life listening to just one file.
I've always thought that many musicians underestimate regular people, their audience. These are people taking back their $500 stereos to Sears for a $1000 one, and it's not bullshit, they can hear the difference. They're not stupid!
And a whole lot of audiophiles overestimate themselves. Look, Dinty, you're not stupid either. You know damn well that trying to compare two stereo systems, one with with twice the quality of loudspeaker as the other, to comparing a WAV to a 320k MP3 is an entirely mismatched comparison. It's like comparing the difference between red and blue to the difference between cream and eggshell.
While I'm not exactly proud of my history in sales (a long time ago in a suburb far, far away), I spent some 6 years or so selling audio gear, pro and consumer grade, and I can guarantee you that when the spit hits the fan - i.e. in the actual listening - that the most self-proclaimed "best ears in the world", including those with perfect pitch (I have had few friends and acquaintances with proven perfect pitch, and more than a few customers who claimed the same talent) and those techie audiophiles and gearheads, almost never agree with any regularity on just what they claim to hear when you actually separate them from the herd and have them individually listen to identical material through identical gear under identical circumstances.
One person's warm is another person's muddy, the third guy's flat is the fourth guy's hyped, this guy's digital CD is that guy's open-reel analog tape, and that guy's "obvious" 3-way crossover was this guy's equally "obvious" 2-way bookshelf, etc. And the WAV/MP3 thing is no different. By making proclamations about what they were hearing that were completely wrong, I have seen practically as many self-proclaimed "golden ears" unknowingly make complete asses of themselves in the listening rooms -and studio control rooms and mastering suites, BTW - as I have drunks in nightclubs do the same.
It's the same bullshit as most wine tasting reviews. I was researching some special reserve port as a present for a friend of mine a couple of months ago. I found one that got equally high reviews form practically everyone across the board. And yeah, it did turn out to be a very good bottle of wine. But I read something like 8 different reviews of it, all by typically respected reviewers, and not a single one of those reviews described this exact same wine the same way. They all liked it, but their reasons and descriptions were all almost entirely different.
It's also like your NS-10s. I know people with the same hearing capabilities as yours that couldn't stand to listen to them for more than 10 minutes at a time. Which one of you is "right"? That answer is you are both right for yourselves, and both wrong in trying to make any blanket judgment about those boxes outside of your own heads.
And whether the OP uses a cream or eggshell backdrop for his stage act isn't going to make a smidgen of difference to anybody, including the sharp-eyed interior decorator/stage manager sitting in the audience, who is the only one in the room could possibly (but not certainly) tell the difference between the two even under the best of light, let alone the light of a club stage.
G.
