MP3 (MPEG-1 Audio Layer 3) and AAC (Advanced Audio Coding) are two different formats for audio files. AAC is also called MP4. Both formats are lossy, meaning that their methods of compressing audio into smaller file sizes results in degraded audio quality. AAC files have an advantage over MP3 because it can create smaller files than MP3 at the same audio quality.
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MPEG-1 format is named for the standards group Moving Pictures Experts Group. MP3 format was developed at the end of the 1980s and became a standard for computer audio in 1991. AAC format originated around 1999 as part of the MPEG-4 standard. While MP3 is still popular, AAC (MP4) is currently the standard for the iPod and iTunes store.
MP3 files are compressed by a factor of 10—that is, a three-minute song that would take up 30 to 40 megabytes in its uncompressed format will become a 3 to 4 MB MP3. AAC files can be smaller than MP3 because you can encode them at a lower bitrate without a drop in file quality. For example, an audio file that you'd normally encode 128 kilobits per second (kbps) using MP3 will give you the same quality with a 96kbps AAC encoding. The resulting file is 25 per cent smaller than the MP3 would be.
The small file size of both MP3 and AAC files make them advantageous for storing music on your computer and on music players. If your audio files were in the same format as on a CD, you could only store about 130 songs on a 4GB music player. Reducing the size with lossless audio compression would give you room for 300 songs. On the other hand, storing songs as MP3 would give you room for over a thousand songs—potentially over 1,250 with AAC.
Advantages of AAC
AAC files are advantageous because they have a smaller file size, allowing for faster downloading and more room for audio storage. They are especially beneficial for podcasts because you can add chapter markers to the file in iTunes, which you can't do with MP3 format. In addition, you can choose to encode an AAC file at a higher bitrate, resulting in a file with the same size as a typical MP3 but with better sound quality.
Advantages of MP3
Although MP3 file sizes are larger than AAC, the format is more widely used, and almost all music players can read it. AAC files, on the other hand, are strongly associated with the iPod and iTunes, and not all music players can open them. The advantages of AAC files don't help your listeners, however, if they don't have a program or music player to open AAC files.
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