John Gruber of Daring Fireball debunks many misconceptions about the AAC audio format that iTunes uses. "There are some people who have long insisted that Apple’s grand scheme for the iPod and iTunes hinges on proprietary file format lock-in, and I think what they’re doing now is grasping for some way to continue making this argument."
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Very well written piece ... with some good education about audio formats and Apple's choices.
To add to his article; I also know that ALL Philips MP3 players also play AACs - so these MP3 player owners will also be able to buy songs from the iTunes Music Store.
Also updated here: