From CCRMA Wiki
Free Lossless Audio Codec (FLAC) is a file format for lossless audio data compression. During compression, FLAC does not lose quality from the audio stream, as lossy compression formats such as MP3, AAC, and Vorbis do.
FLAC reduces bandwidth and storage requirements without sacrificing the integrity of the audio source. A digital audio recording (such as a CD track) encoded to FLAC can be decompressed into an identical copy of the audio data. Audio sources encoded to FLAC are typically reduced in size 40 to 50 percent.
Flac supports tagging, cover art and fast seeking. FLAC's free and open source royalty-free nature makes it well-supported by many software applications (such as Amarok, Rhythmbox, Audacity, Songbird, among others), but FLAC playback support in portable audio devices and dedicated audio systems may be limited. Apple's iTunes needs some tweaking in order to play FLAC files.