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Codec is a portmanteau combining the words compressor and decompressor, or encoder and decoder.  An audio codec is a hardware device or a computer program that compresses/decompresses digital audio data according to a given audio file format or streaming audio format. The object of a codec algorithm is to represent the high-fidelity audio signal with minimum number of bits while retaining the quality. This can effectively reduce the storage space and the bandwidth required for transmission of the stored audio file. Most codecs are implemented as libraries which interface to one or more multimedia players, such as QuickTime Pro, iTunes, or Windows Media Player.

With analog recording, audio is captured mechanically, either by  a continuously modulated tape or a continuously cut groove such as a vinyl record.  The modulated tape or cut groove is analogous to the actual physical sound, so on playback, the recorded signal reproduces the original sound with astonishing accuracy.  With digital recording, a string of ones and zeroes which are analogous to the original audio signal replaces the physical cutting or modulating.  Each series of ones and zeroes represents a sample of the audio signal.  On playback, these samples are decoded, and the result is an astonishingly accurate reproduction of the original sound.  To create the zeros and ones, analog to digital (A/D) converters use time sampling (frequency) and amplitude quantization (bit depth) to encode the analog waveform as amplitude values in time.  The graphs to the right are simulations of audio being sampled at different rates and at different bit depths.  Notice the higher the sample rate and bit depth, the more the resulting waveform resembles the original analog waveform. 

This method reproduces audio that sounds astonishingly similar to the original analog audio.  However, this this sampling method also makes for huge file sizes and slow load times.  Codecs attempt to achieve the same level of audio fidelity with smaller file sizes by using a more intelligent way of encoding audio known as perceptual coding.  Click on the perceptual coding tab at the top of this page to learn more.