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This article is from the MPEG FAQ, by Frank Gadegast phade@cs.tu-berlin.de with numerous contributions by others.

18 So how does MPEG audio work?

Well, first you need to know how sound is stored in a
computer. Sound is pressure differences in air. When picked up
by a microphone and fed through an amplifier this becomes
voltage levels. The voltage is sampled by the computer a
number of times per second. For CD audio quality you need to
sample 44100 times per second and each sample has a resolution
of 16 bits. In stereo this gives you 1,4Mbit per second
and you can probably see the need for compression.

To compress audio MPEG tries to remove the irrelevant parts
of the signal and the redundant parts of the signal. Parts of
the sound that we do not hear can be thrown away. To do this
MPEG Audio uses psychoacoustic principles.

 

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