A local server has a connection to a client and to a remote server over the Internet. The local server receives a request for an audio file from the client and, in response, transmits a requests for the audio file to the remote server. Upon receiving the audio file, the local server transcodes the audio file received from the remote server and then transmits the transcoded audio file to the client. Transcoding may include changing the audio file type, compressing the audio file, reducing the number of audio channels, or reducing the sampling rate of the data. The local server determines the extent and type of transcoding to be performed on the audio file as the audio file is downloaded from the remote server. The extent and type of transcoding are based on the file formats which the client is capable of handling, the size of the requested audio file, the memory capacity of the client, the bandwidth of the connection between the local server and the client, and the desired level of audio quality. Transcoding may be performed on-the-fly while the requested audio file is being downloaded to the local server from the remote server and while the modified audio file is being downloaded from the local server to the client.