Overview

A common question is "which format is best for me?", or "which should I use, this or that?". While these are important decisions we have all had to make at some point, there is usually no simple answer that can be given to new users.

Why no simple answer?

There are several factors that you must first consider, my needs aren't the same as yours, maybe we want to do different things with our music, or we have a different amount of disk space to use.

Common considerations are:

Do you want the option of using a portable player now?
Would no playback support other than on your PC be a problem in the future?
Do you need to use a popular format?
How much space do you want to use for you music?
How much music do you want to store?
Are you simply interested in quality?
Do you need any additional technical features?
How good is your hearing?

The last question is the most important. Why? I have poor hearing, so something that sounds good to me could well be annoying to you. Only you have your ears, so only you know what sounds good to you.

We can however make general recommendations based on test results from the entire community - for example:

Lossy codecs

MP3 has the most widespread acceptance among the general population and in hardware players
MPC was considered in the past as the best format for high bitrates (> 175kb/s)
Ogg Vorbis performs very well from low to high bitrate, it's open-source and patent free
AAC is the latest industry standard (MPEG) which offers excellent at every bitrate with modern encoders
There are other lossy codecs at the lossy page.

Lossless codecs

Lossless compression is the only way to retain all the original quality and lose no information.

FLAC is considered the most widely supported format, it's open-source and patent free
LA and OptimFrog achieve the greatest compression ratios
WavPack and OptimFrog support hybrid modes, i.e. combination of lossy (for smaller files, albeit not as small as lossy codecs) and lossless. WavPack is open-source
For a list of lossless codecs and their pro's and con's see the lossless page.

How can I choose for myself?

Listen and see, use ABX. Be aware that your tolerance can change if you train your ability to hear artifacts.
Read the pages for the different codecs and see their pro's and con's.