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MP3, which is short for MPEG-3, is an audio format that produces nearly CD quality sound with little memory space. WMA is an older format, and stands for Windows Media Audio. It was designed to work with Microsoft's Windows Media player and can be converted to MP3 using a conversion utility such as Jet Audio.
At 128 kbps, Microsoft claims that WMA is very close to CD quality, however, MP3 has become the overwhelming standard for portable audio players.
Some MP3 players also support WMA, but much of the content available in WMA format is protected. MP3s on the other hand, can be easily downloaded through peer-to-peer file sharing programs such as Gnutella and Napster.
Most audiophiles also claim that MP3 provides superior sound quality as it uses a perceptual encoding technique.