Audiology students in the Netherlands once did a study among several hundred high school test. They did exactly what's said in the article: they put blindfolds on people (so they'd be concentrating on nothing but the sound emanating from the headphones) and played several songs, in MP3 and original WAV formats.
They had to say which versions of the songs they liked best. Welp, 82% said that the mp3-versions sounded best. But when pressed, most of the subjects simply said that they "couldn't tell the difference".
This was AFTER the testers had informed the subjects which versions were MP3 and which had been WAV. Psychologists explained that the subjects, when asked why they preferred the MP3 versions, was because most people had never heard of a WAV file.