@gtown: the format you're asking for is named Ogg Vorbis.
Contrary to MPEG1 layer 3, Vorbis doesn't use high-pass or low-pass filters to reduce sound complexity; so, it doesn't 'muffle' the sound.
Contrary to WMA, Vorbis tries not to modify a sound sample's envelope; so, it doesn't add harmonics.
I did the following tests: I took a 1998 CD track, that contained a high range of sound, and compressed it:
- with LAME MP3 compressor 3.98, with Variable Bitrate, q=9, max bitrate = 320 and 160
- with WMA audio, 160 kbps and 64 kbps
- with Vorbis with quality = 5 to 2 in 0.25 increments,0 and -1.
Then, I took the best headphones and audio circuitry I had, and played back the tracks
Vorbis starting at quality 4.5 is transparent - there is virtually no way to hear the difference between the track and the compressed copy. Average bitrate is close to 220 kbps. Same piece, at q=3: audio is still very good. Bitrate is around 140 kbps (good quality/size compromise). same piece, at q=-1: bitrate is around 80 kbps. There is slight audible distorsion in some complex parts, and the music seems 'bland'.
MP3 (and you must admit, I used the best codec in its most efficient configuration): even at 320 kbps, you may notice a difference with the original. If bitrate is maxed out at 160 kbps, you may get distorsions in some complex parts. No, it's not an audiophile format.
WMA: above 160 kbps, quality is good. At 224 kbps, transparency can be considered achieved. At values of 128 kbps and lower, harmonics start appearing and the sound gets warped. It becomes impossible to listen to.
My conclusion:
- use FLAC for lossless audio. I tested their alleged identical-to-source binary decompression process, and they are right. It works. It can save around 30-50% of disk space over raw PCM.
- use Vorbis for any other use: high or low quality, it is never a pain to listen to.
- MP3 is to be used for compatibility reasons only. Even then, you should favour variable bitrate with no ceiling and high quality modes; however, not all players can handle it (some are limited to 160 kbps samples) which may result in slowdowns, or cracks.
- WMA should not be used.