| AAC stands for either MPEG2 Advanced Audio Coding or MPEG4 Advanced Audio Coding.
The MPEG2 audio-encoding standard of the format is not backward-compatible with MPEG1 audio. MPEG2 AAC can produce better audio quality than MP3 using less physical space for the files. MPEG4 AAC can produce better quality and smaller files than MPEG2 AAC. AAC is the audio file format used by Apple in their popular iTunes Music Store. Files may appear on your system with the ".M4A" filename extension.
Why AAC was designed
AAC was designed as an improved-performance codec relative to MP3 (which was specified in MPEG-1) and MPEG-2 Part 3 (which is also known as "MPEG-2 Audio" or ISO/IEC 13818-3).
AAC ISO Standard
AAC, which was first specified in the standard known formally as ISO/IEC 13818-7, was published in 1997 as a new "part" (distinct from ISO/IEC 13818-3) in the MPEG-2 family of international standards.
The codec design was further improved in MPEG-4 Part 3, known formally as ISO/IEC 14496-3, with the addition of Perceptual Noise Substitution (PNS) and a Long Term Predictor (LTP).
Bifurcations in the AAC standard
Although the AAC codec specified in MPEG-2 Part 7 and the AAC specified in MPEG-4 Part 3 are somewhat different, they are both informally known as AAC (for clarity it is best to refer specifically either to MPEG-2 AAC or to MPEG-4 AAC).
AAC's improvements over MP3:
Sample frequencies from 8 Hz to 96 kHz (official MP3: 16 Hz to 48 kHz)
Up to 48 channels
Higher coding efficiency for stationary signals (blocksize: 576 -> 1024 samples)
Higher coding efficiency for transient signals (blocksize: 192 -> 128 samples)
Much better handling of frequencies above 16 kHz
More flexible joint stereo (separate for every scale band)
What this all means to the listener is better and more stable quality than MP3 at equivalent or slightly lower bitrates.
AAC and Apple
An iPodIn April, 2003, Apple Computer brought mainstream attention to AAC by announcing that its iTunes and iPod products would support songs in MPEG-4 AAC format (via a firmware update for older iPods), and that customers could download popular songs in a protected version of the format via the iTunes Music Store. AAC has now become so associated with Apple hardware and software that people are commonly of the mistaken belief that AAC expands to "Apple Audio Codec." Optionally, a digital rights management scheme (named FairPlay) can be employed in tandem.
View How to convert AAC to MP3, WAV, WMA.