Although MP3 is most popular format for encoding music, it is by no means only one. There are two basic methods for compressing audio – lossless and lossy, and for each of these methods there are many formats.
Lossless compression means that none of audio data is removed during compression. Lossy compression means that audio data is permanently removed from audio file. Lossy compression results in smaller files, but there is no way to rebuild audio data to its original format. MP3 is an example of lossy compression.
Lossy Compression Formats
There are many alternatives to MP3 when it comes to encoding audio files. Microsoft reportedly developed WMA format to avoid licensing costs associated with MP3. WMA files can be played with Windows Media Player that is included with Windows operating system as well as many other audio players. It features similar encoding rates to MP3 and similar file sizes.
AAC (Advanced Audio Coding) is format preferred by Apple and is used for its popular iTunes and iPod products. AAC files can be smaller than MP3 files because it uses more efficient encoding technology. A 96 kpbs AAC file is similar in sound quality to a 128 kbps MP3 file.