"we can now confirm that activating an Apple Music subscription kills ALAC playback on your iPhone. How so? When you activate an Apple Music subscription, you lose access to your local library and local syncing capabilities. Instead, your local library is matched with songs in the Apple Music library
…
Where your files aren't matched, they are converted locally on your Mac into AAC 256kbps files, and uploaded to Apple's server -- and that's that. No more ALAC on your iPhone, despite your iPhone's ability to play ALAC files in all their glory. For many, this won't be an issue. For some, like me, it's a big issue."