There are only a few audio compression formats, just like there are only a few image compression formats (you may have heard of them: JPG, GIF, BMP). Two of the most popular audio formats are WMA, or Windows Media Audio, and MP3 (short for MPEG, Moving Pictures Experts Group, Audio Layer 3). WMA is the oldest audio format, produced by Microsoft, to work with Microsoft’s Windows Media Player. The WMA compression format was specifically designed for this format and therefore cannot be converted to other audio formats.
The audio quality of the WMA and MP3 audio formats tend to be noticeably different. WMA is a decent quality audio format when transmitted at phone line speeds (maybe 30 kbps or so). At such speed, WMA almost reaches an FM level of audio quality, though not quite. At 128 kbps, Microsoft claims that WMA is almost CD-quality, though many would deny this. WMA, however, should not be completely overlooked. Compression provides relatively small audio files and requires less processing power to run. Thus, it retains a declining niche as MP3 has become more popular and widely used.
MP3 audio compression was developed in Germany in 1991 by the Fraunhofer Institute. MP3 generally provides higher quality sound than WMA because it uses perceptual audio coding to compress CD-quality sound by a factor of 12. As a result, MP3 has become almost the universal standard in use and audio streaming. It provides CD-quality sound with reasonable compression sizes and high transmission speeds. Be careful, however, with low bitrates, as the quality of the MP3 will likely suffer.