I think the most interesting part of this is to see if this makes more people use flac.
From the kickstarter FAQ:
Is PonoMusic a new audio format? What about PonoMusic quality?
No. We want to be very clear that PonoMusic is not a new audio file format or standard. It is an end-to-end ecosystem for music lovers to get access to and enjoy their favorite music in the highest resolution possible for that song or album. The music in the PonoMusic.com Store is sold and downloaded in industry standard audio file formats.
The PonoMusic.com Store uses FLAC (Free Lossless Audio Codec) audio format as its standard, for compatibility, although the PonoPlayer can play most popular high-resolution music formats from other sources. PonoMusic has a quality spectrum, ranging from really good to really great, depending on the quality of the available master recordings:
• CD lossless quality recordings: 1411 kbps (44.1 kHz/16 bit) FLAC files
• High-resolution recordings: 2304 kbps (48 kHz/24 bit) FLAC files
• Higher-resolution recordings: 4608 kbps (96 kHz/24 bit) FLAC files
• Ultra-high resolution recordings: 9216 kbps (192 kHz/24 bit) FLAC files