The M4V file format was developed by Apple. It is very similar to the MP4 file type, with the main difference being that M4V may contain Apple's DRM protection, Fairplay. Video content downloaded from the iTunes store is likely to be in M4V format. If M4V file does have DRM enabled then the iTunes account used to procure the file will need to be authenticated on the computer playing the file.
The M4V file is a container that allows audio and video. In certain circumstances where Apple's DRM has not be applied to the file, it is possible to play the file from a different unauthenticated computer by amending the file extension from .m4v to .mp4. Additionally m4v provides the functionality to create chapter information which is not possible with MP4.
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MP3 is a digital music format which allows CD tracks to be reduced to around a tenth of their normal size without a significant loss of quality. MP3 gets rid of a lot of the information recorded in a song that our ears are not able to hear and then uses complex algorithms to reduce the file size. This then enables you to get hundreds of songs on to a CD and it also has opened up a new market over the internet - the download market as download times have been significantly reduced.
The MP3 format is a lossy format. That means that an MP3 file does not contain 100% of the original audio information. Instead, MP3 files use perceptual coding. In other words, that means it removes the information that your ear doesn't notice thereby making the file smaller. The reason lossy formats are used over RAW is that RAW audio files are too large to travel over the internet at any great speed. By using lossy formats it enables even dial up users to download mp3 files at a reasonable speed. RAW file formats generally require 176,000 bytes per second compared to a lossy format which requires 17,600. The difference is massive and so are the download times.