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MPEG-1 or MPEG-2 Audio Layer II, more commonly referred to as MP3, is an audio coding format for digital audio which uses a form of lossy data compression. It is a common audio format for consumer audio streaming or storage, as well as a de facto standard of digital audio compression for the transfer and playback of music on most digital audio players.

The use of lossy compression is designed to greatly reduce the amount of data required to represent the audio recording and still sound like a faithful reproduction of the original uncompressed audio for most listeners. An MP3 file that is created using the setting of 128 kbit/s will result in a file that is about 1/11 the size of the CD file created from the original audio source. An MP3 file can also be constructed at higher or lower bit rates, with higher or lower resulting quality.

The compression works by reducing the accuracy of certain parts of a sound that are considered to be beyond the auditory resolution ability of most people. This method is commonly referred to as perceptual coding. It uses psychoacoustic models to discard or reduce precision of components less audible to human hearing, and then records the remaining information in an efficient manner.

The first large peer-to-peer file sharing network, Napster, was launched in 1999.

The ease of creating and sharing MP3s resulted in widespread copyright infringement. Major record companies argued that this free sharing of music reduced sales, and called it “music piracy”. They reacted by pursuing lawsuits against Napster (which was eventually shut down and later sold) and against individual users who engaged in file sharing.