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→File Formats
It's important to understand that file formats do not necessarily indicate the exact codec used to encode the audio they contain. They are best thought of as '''containers''', with a defined '''header''' format. This allows various software to know how to extract the header information, where to find the audio data in the file, and how to decode it. A '''codec''' is what is actually used to en'''co'''de or '''dec'''ode the audio. Most audio player software has its own codecs, while some can refer to external software. Most file formats are limited, however, to support only a few codecs. Thus, it is common to associate compression/encoding schemes with file formats.
Containers and codecs can be '''open''' or '''proprietary'''. Authors of open formats disclose the technical details of the containers/codecs and freely-license it to anyone else, allowing other containers/codecs and software to incorporate it. Others are proprietary, withholding technical details from the public and only offering restrictive licensing, if any. As digital audio became a popular form of consumer music, Apple and Microsoft created rivaling proprietary formats seeking to capture markets for distributing and playing digital audio, preventing each other's PC operating systems and digital audio players from creating or playing each other's file formats.
'''Compression''' uses various techniques to reduce the file size of digital audio. The main concern with compression is whether it noticeably degrades the audio signal - many schemes result in a loss of quality, known as '''lossy''' compression. Such compression is based upon human perception - reducing detail in places that it is least likely be noticed (ex. replacing multiple cymbal hits with high-frequency noise). Of course, different implementations may be more noticeable than others; and many feature different settings, allowing trade-offs between the compression ratio and quality of audio. Different types of compression are not necessarily firm, either. For example, the common "mp3" compression is subject to interpretation, with some implementations considered better (less evident in audio playback for the same compression ratio) than others.