MPG is commonly associated with video and audio compressions MPEG-1 or MPEG-2. This is designed to compress audio and video to formats that can be downloaded. Movies with this extension are of lower sizes and greater quality, but quality differs from original VCR videos. This file format can run on Mac, Windows and other portable devices.
MPEG-1 is a standard for lossy compression of video and audio. It is designed to compress VHS-quality RAW digital video and CD audio down to 1.5 Mbit/s (26:1 and 6:1 compression ratios respectively) without excessive quality loss, making video CDs, digital cable/satellite TV and digital audio broadcasting (DAB) possible. Today, MPEG-1 has become the most widely compatible lossy audio/video format in the world, and is used in a large number of products and technologies. Perhaps the best-known part of the MPEG-1 standard is the MP3 audio format it introduced.
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.