Most of us are aware there are multiple file formats that exist for the storage and playback of recorded music. By far the most common types today are MP3 and AAC. MP3 is pretty universal, and because AAC is Apple's format of choice it too has become extremely popular. AAC is generally considered to sound a little better than MP3 for any given bit rate. (If you need a refresher on the bit rate stuff, please
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A CD stores music in a ".cda" (CD Audio) file format at 1.4mbps per second. If it's ripped (converted to a computer file format) unchanged (not compressed) in a Windows computer, it becomes a ".wav" file. If you do the same in Apple's operating system it becomes an ".aiff" file. You end up with the same information but in three different file formats.
But, in order to reduce file sizes to make it possible to store lots of songs on your phone, tablet or portable player, these files must be reduced in size. MP3 and AAC data reduction software does exactly that, eliminating information that the software "thinks" you won't miss in order to make smaller files. And there lies the rub, as they say. The big difference is these lossy formats use perceptual coders with complex algorithms to toss out up to 90% of the data in order to save storage space. What is remarkable is that there is even ANY semblance of music left ... truly a tip of the hat to these engineers. However, these are still lossy formats and once heard are clearly not high fidelity.
There's an ongoing discourse on the Internet as to how much information you can delete from a digital music file before people can hear the difference. It's very important to realize that major factors influencing what you can hear are determined by the quality of the equipment used for playback, the original quality of the recording and the critical listening capability of the observer.

Within both MP3 and AAC you are given the option of choosing the recorded quality level. Quite simply, the higher the bit rate, the better the quality but the larger the resulting file will be. In many "ripping" programs the default bit rate is128kb per second which is considered by pretty much everyone concerned to result in low audio quality. Yes, the song, voices and instruments will be recognizable, but for anything beyond background listening so much missing information will be easily noticed. If file size isn't critical, consider 256 or 320bps. Each successive increase in file size should result in corresponding higher quality reproduction (although it may be harder to hear the differences beyond 256bps on your portable gear). If the encoder you're using allows variable bit rate we would recommend you choose a data reduction scheme that includes VBR. This will let the encoder vary the compression bit rate based upon the content complexity and dynamic range of the source material. We would recommend that you rip your music for portable use at a minimum of 192 bps using a good MP3 encoder, and for your home hi fi, nothing less than a lossless format should do.
Most Popular Lossless formats:
FLAC and ALAC are truly compressed formats (rather than the above "data reduction" lossy formats), much like ZIP files. They store every bit of the original data in a lossless compressed format, maintaining all the original recordings' fidelity.
ALAC - Apple Lossless Audio Codec -
This is an Apple devices only format (and not all devices) that compresses the files about 50% from their original size while maintaining bit-for-bit (lossless) playback. If you'd like to rip a CD to an ALAC file, simply put the CD onto your computer's media drive and open it in iTunes. Go to iTunes "Preferences", then to "Import Settings" (see below) on the first page. In the "Import Using" dropdown menu set it to "Apple Lossless Encoder" and import the CD. When iTunes is done the file will be added to your library and you can add it to another iOS device.
FLAC - Free Lossless Audio Codec -
Like ALAC, digital audio compressed by FLAC's algorithm can typically be reduced to 50-60% of its original size and decompressed to an identical copy of the original audio data. FLAC is not an available option for ripping in iTunes, although it is the preferred format for most HD Audio downloads. If you want to digitize your music in FLAC, you will need a different program, such as the very popular JRiver Media Player. FLAC has support for metadata tagging, album cover art, and fast seeking. Though FLAC playback support in portable audio devices and dedicated audio
systems is limited compared to lossy formats such as MP3 or uncompressed, FLAC is supported by more hardware devices than competing lossless compressed formats and is slowly becoming an accepted standard.