Headphones

A local FLAC file is obviously preferable but lesser known songs, especially in languages other than English, are usually impossible to find in any format, let alone lossless. And I'm definitely not paying for anything digital.

Also, when browsing randomly, having the possibility to have any song you can think of immediately available is a massive convenience, worth much more than a lossless format. And in the case of old recordings, or even not so old but from humble studios, the lossless version has a lower quality than a bad quality mp3 of a modern properly recorded track.

And finally, to answer your question, yes: Spotify sounds spectacular on my set-up. The difference between good and cheap gear is massively bigger than that between FLAC and 192 kbps mp3. Lots of files in my local library are downloaded from Spotify and I can't tell any difference between those and the lossless ones.