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The file format iTunes uses is AAC, which was devised by the MPEG (Motion Picture Experts Group), the same folks that came up with MPEG movies, the MPEG-2 format used on ALL DVDs, the MPEG-3 standard (MP3), and the new MPEG-4 standard which was designed for internet use. MP3 is actually about 10 YEARS old, and the codec is not that efficient nor does it reproduce songs with the accuracy of AAC, Ogg Vorbis, or even some of the new Windows Media formats.
The windows media formats used by EVERY OTHER competitor to iTunes IS proprietary, as the codec itself is owned by Microsoft and it will not be licensed or divulged to other companies.
The only component of the iTunes music store that is not standard AAC is the weak copy-protection scheme that is used to ensure songs are not pirated. This is copy protection system is called FairPlay and was actually created by a third party, and Apple has licensed it for use with the iTunes music store. Any company could license FairPlay and build it into their "MP3" players so that Apple's AAC files can be used, but so far nobody has decided to do so. So this is not really as proprietary as the windows media format, either.
The restrictions placed on the AAC by FairPlay are:
1) You can only play the song on 1-3 computers, and on an unlimited number of digital music playyers, including iPods
2) You can only burn the SAME playlist to CD ten times in a row. You can then reorder one of the songs and burn that playlist 10 times, etc. This is only done to prevent mass duplication ala black market, and really shouldn't ever interfere with normal use. YOU NEVER HAVE TO RE-PURCHASE A SONG!
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