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What is the difference between lossy, lossless, and uncompressed audio formats?

Uncompressed audio is simply audio without any compression applied to it. Uncompressed audio is commonly used in AV conversions in PCM or WAV form.

Lossless audio applies a compression to uncompressed audio without losing any information or degrading the quality at all. Lossless audio is not common in the AV world, but it is possible with formats like WMA Lossless or FLAC in Matroska.

Lossy audio attempts to apply to discard as much ‘irrelevant’ data as possible from the original, with the goal being to produce a file much smaller than the original that sounds almost identical. This results in a much lower bitrate and filesize then lossless or uncompressed audio. Lossy audio formats are extremely prevalent in AV, and include AC3, DTS, AAC, MPEG-1/2/3, Vorbis, and Real Audio.

We also talk about lossy and lossless processes. Whenever you transcode to a lossy format (for example wav > MP3), a loss in quality follows, therefore it is a lossy process. Transcoding from a lossy format to a lossy format (for example Mp3>AAC) is even worse, since there is loss introduced both from the first lossy file and the encoding of the second.

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