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I'm having my bands new album printed physically and I've got a template from a printing company. The template dictates the album cover will be roughly 141mm wide, 125.5mm high, and must be at least 300dpi. Currently, the album cover photoshop document I've been working on is around 10x that size and at 72 dpi.

I've tried using the "image size" tool to bring it to the right dimensions and dpi, but the image seems a little more faded and lesser in quality (mostly around the text) compared to when I simply duplicate the merged layers (way oversized as they are) into the template document and then resize it via the transform tool.

What is the difference between doing these methods? and which will give me better results when printing the album?

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If your artwork is 10 times the required size at 72 DPI, logically at the correct size (without resampling the artwork), it will be 720 DPI...

Since the requirements are for "at least 300 DPI", what you have is fine.

As for resizing, in theory there shouldn't be any difference but since you're more than halving the resolution there is going to be a reduction in image quality. Controlling that loss of quality (and I assume the reason for the differences you are seeing in resizing methods), is down to the interpolation method used...

When resampling artwork via the Image Size dialog you can set the interpolation method:

enter image description here

But you also have the same option when transforming a raster layer:

enter image description here

Note that if you're placing your full size artwork as a Smart Object and resizing you don't get the option to change the interpolation method. You can change the interpolation method through the preferences though (Preferences → General → Image Interpolation).

As for which interpolation method to use; that is a decision you need to make based on the artwork and your desired outcome (although Photoshop gives you some hints as to which is best for which situations in the Image Resize dialog).

Also, since the requirements are for "at least 300 DPI" and your artwork is bigger than that, it may be worth increasing the resolution of the template so you maintain the higher resolution in your supplied artwork; I'd talk to the printers about that first though.

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