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MP3 stands for MPEG-Layer 3 and is a popular codec.
MP3 format was defined in the early 1990s. After MP3
was finalized, standardization work continued to develop
a higher quality coder than
could be achieved while preserving MPEG-1 backward compatibility.
The result of this effort is MPEG-2 Advanced Audio Coding,
or simply AAC.
AAC stands for Advanced Audio Coding, which is a high
quality audio coding technology and the solution of choice
for many broadcast and electronic music distribution applications.
In independent tests, the coding efficiency of AAC proved
to be superior to MP3, providing higher-quality audio
reproduction at lower bit rates. Developed and standardized
as part of ISO/IEC MPEG 2 specification by four industry
leaders (AT&T, Dolby Laboratories, Fraunhofer IIS
and Sony Corporation), AAC is supported by a growing number
of hardware and software manufacturers.
MP3 represents the
state of audio coding technology in the early 1990s, whereas
AAC benefits from more recent advances in the understanding
of audio compression techniques. For example, on a 32-MB
memory card, with AAC format, you can save twice as many
songs as compared to MP3 format.
http://www.mpeg.org/MPEG/aac.html
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