AAC, which Apple likes, is now the preferred standard for music, video downloads

The Fraunhofer Institute for Integrated Circuits, , a division of the state-funded German research institution that bankrolled the MP3's development in the late '80s, has officially halted its licensing program for "certain MP3 related patents and software," effectively making the MP3 music format free for developer use. Apparently, the last of the patents expired, which is the reason that it is no longer licensing the format.

The development of MP3 started in the late 80s at Fraunhofer IIS, based on previous development results at the University Erlangen-Nuremberg. Although there are more efficient audio codecs with advanced features available today, the format is still very popular among consumers. 

However, most state-of-the-art media services such as streaming or TV and radio broadcasting use modern ISO-MPEG codecs such as the AAC family or in the future MPEG-H, notes the Fraunhofer Institute for Integrated Circuits. Those can deliver more features and a higher audio quality at much lower bitrates compared to MP3.

Bernhard Grill, director of that Fraunhofer division and one of the principals in the development of the MP3, told NPR that another audio format, AAC — or "Advanced Audio Coding," which his organization also helped create — is now the "de facto standard for music download and videos on mobile phones." He said AAC is "more efficient than MP3 and offers a lot more functionality.”

AAC is a proprietary audio coding standard for lossy digital audio compression. Designed to be the successor of the MP3 format, itgenerally achieves better sound quality than MP3 at similar bit rates. 

AAC is the default or standard audio format for the iPhone, iPad, iPod touch, iTunes, YouTube, Nintendo DSi, Nintendo 3DS, DivX Plus Web Player, PlayStation 3 and various other devices. It’salso supported by manufacturers of in-dash car audio systems.