When it comes to digital audio it appears that MP3 is a clear winner but before you run off to publish all your audio projects there are a few points you should consider.
Firstly lets take a look at some lossless Codecs, two of the most popular ones are FLAC (Free Lossless Audio Codec) and APE (Monkey's Audio) and of those two FLAC is the preferred as it has faster decoding speeds and error handling as well as being compatible with Ogg and Matroska containers. The only problem with FLAC is that the compression (although excellent) is limited therefore the files end up at nearly 40MB for songs that would only be 5MB at standard MP3 compression. FLAC is an excellent Codec and is excellent for encoding music for home use but its size means that it is not ideal for distributing your work.
When it comes to lossy Codecs the only real rival to MP3 is Vorbis (AKA Ogg Vorbis as it is usually found in the Ogg container). Vorbis actually has several advantages above MP3 as it has higher fidelity and has the benefit of being Open Source. This difference in quality and availability means that many people have move away from MP3 to Vorbis, most notably many game developers, some radio stations and also people involved in encoding video for internet distribution. The only real advantage MP3 has over Vorbis is its familiarity to non technical people.
Well if the above hasn't changed your mind and you are still itching to encode in MP3 there are a few last points to consider. The main setting you control when you encode to MP3 is the bit rate, with many MP3s encoded at 128kbit/s however most people can tell a distinct drop in audio quality compared to CD audio at this bitrate. To combat this many artists and fans chose to encode at 192kbit/s as there is a distinct improvement of quality when compared to 128kbit/s and the quality is near the threshold where it is indistinguishable from the original, that being said many audiophiles and hardcore fans chose to encode music at 320kbit/s thus providing excellent quality music. The only problem with music encoded at 320kbit/s is the file size is approximately double that of standard MP3s therefore it becomes a hindrance to those who wish to download the files using dial-up, personally I would chose to wait the extra time for the much improved quality but as much of this music is played back on computer systems with poor quality speakers this may not be an issue to the wider public.
Here is two sample clips of the same song one encoded at 128kbit/s and the other at 320kbit/s
128kbit/s Sound Clip
320kbit/s Sound Clip
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