Any music format like MP3, MPC, OGG or WMA that can actually achieve near-CD quality at 128kbps or so is "lossy" compression. The reason for this is that the encoder takes a look at the song and tears it apart and mangles it so that the only data remaining is what we absolutely can hear, assembled in such a way as to minimize file size. These parts of the audio can never actually be replaced. The problem with lossy compression is that some of us have such good hearing that nothing less than the original song will actually suffice.
     It's for this reason that people on the net have also developed "lossless" compression. What lossless compressors do is either look at the file as the computer sees it (hexadecimal numbers) and use sophisticated mathematical formulas to simplify the numbers; or they look at the audio stream and determine where portions can be removed or rewritten so that the sound does not change at allso that if re-written to an audio-CD the song will still sound exactly the same.
     However, perfect copying does come at a price. As lossy encoders claim very good quality at bitrates like 256kbps or 192kbps, lossless encoders need at the very least 600kbps to do their job. Also, playing some lossless formats is more than a little CPU-intensive, so they're better suited for archival purposes than for listening.
     The top three lossless encoders out there are
Monkey's Audio, FLAC, and LPAC. I'm told FLAC is the best of the three but if you're really concerned about lossless compression then try them all out for yourself.
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