A funny thing happens when we listen to music. We don’t hear it all. Of the complex acoustical mix that seduces our ears when a song plays, we’re capable of discerning only the most dominant qualities. If two similar frequencies are playing at the same time, for example, we detect the louder one; if a soft sound follows a louder one, it can take up to a tenth of a second for us to hear the subtler tone.

MP3 technology takes advantage of our auditory shortcomings to shrink digital music files by a factor of 10 or more without sacrificing the quality of the listening experience. The software eliminates what our ears can’t discern, then replaces redundancies in the remaining string of digital bits with abbreviations. MP3 can turn a 50-megabyte file that would otherwise take hours to download from the Internet into a five-megabyte file that takes minutes. Consequently, consumers have access to high-quality music recordings on Web sites such as Napster and MP3.com-a threat to CD sales that currently has the recording industry in a snit.

Although the MP3 hullabaloo is fairly recent, the technology has been around since the Erlangen, Germany, research facility the Fraunhofer Institute for Integrated Circuits acquired a German patent for it in 1989. (The U.S. patent was approved in 1996.) Fraunhofer allowed free use of the technology in its early days, giving developers a chance to improve its encoding and decoding performance. It was soon integrated into the Moving Picture Experts Group’s standards for the compression of digitized audio and video. (The name MP3 itself comes from the group’s acronym, MPEG, and stands for MPEG audio, layer three.) The first MP3-playing software, the Amp, was created in 1997 by Advanced Multimedia Products and became a model for later Windows- and Mac-based devices such as WinAmp and MacAmp.

In September 1998, the Fraunhofer Institute announced that it would begin collecting royalties and charging developers a license fee of $15,000 annually. The threat of fines or suit has had little apparent impact on the MP3 movement. Today, “MP3” is the second most popular search word on the Internet, behind “sex.”

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