Audio formats are different ways of storing digital sound, and each format is designed for a different balance of sound quality and file size.

Compression: WAV (hi-res) is the standard format all CDs are encoded in. However, an original digital audio file can be GB in size. They can be reduced in size using compression or by removing some data (lossy). Audio formats such as FLAC (Free Lossless Audio Codec) reduce the file size whilst retaining all of the full original audio/data. To deliver the highest quality audio file at a usable size FLAC delivered in a WAV file is the best option.

Lossy formats deliberately remove some data to make the file dramatically smaller. Formats such as MP3 use algorithms to remove frequencies humans find difficult to hear. However, spacial soundscapes, binaural audio and surround sound depend on subtle spatial frequencies. When listening through quality headphones a 128 kbps MP3 may sound different than a 320 kbps MP3.

Modern streaming services commonly use Advanced Audio Coding, usually called AAC. AAC is technically more advanced than MP3 and generally sounds better at the same bitrate. However, it is still a lossy format, and it can still introduce artefacts, particularly in material containing stereo phase information, low-frequency ambience, or binaural effects.