The following was found at the sony website. see below to find full documentation.

I found this just alittle bit interesting. A deep look into this tells of a technology that could be great, but is propiatary, and most likely DRM (Digital Rights Management) ready, or is a form of it (Sony is a member of the RIAA, and MPAA). I don't trust it and never will.

here is part of the article:

ATRAC3 and ATRAC3plus technologies have been developed specifically for portable sound recording and playback devices that utilize internet music distribution systems. These technologies are designed to realize the transfer of high quality music content over the internet. High-speed compression processing as well as light resource requirements for compression and decoding are utilized to provide the best possible internet audio experience.

The audio compression technologies used by Sony analyze the digital audio data and reduce the size of this data by applying the latest digital audio technologies.

Compressing audio data makes it possible to:
-Reduce the size of recording media, thereby making compact recorders/players possible.
-Reduce audio data transmission time.

As a result, internet music distribution can be achieved expanding the ways in which you can enjoy music.

ATRAC3 is a newly developed compression technology based on Sony’s proprietary ATRAC(Adaptive TRansform Acoustic Coding). This audio compression technology is supported by MiniDisc. ATRAC3 achieves twice the data compression rate of ATRAC with virtually no loss in sound quality. ATRAC3 can reduce the size of audio data to 1/10 of the original audio source.

Utilizing the characteristics of the human auditory system, sound that is inaudible to the human ear, and data that occurs before and after loud sounds are dropped to reduce data size without losing what’s most important, sound quality.

The audio data analyzing resolution is two times higher than that of the ATRAC system.
This allows more effective compression with the least amount of sound quality degradation.

The original audio spectral waveform is divided in frequency bands and then processed in two different map pattern contours for efficient compression with the least amount of quality degradation.

In the digital signal sequence of 0 and 1, frequently appearing patterns are replaced with shorter sequences, resulting in a smaller amount of required data and efficient compression.

Short for “Adaptive TRansform Acoustic Coding 3 plus”, ATRAC3plus is an enhancement of ATRAC3 that incorporates advanced audio compression technology. This new technology analyzes longer periods of audio signals to obtain more precise information of the input signals. This technology also introduces a newly developed algorithm which achieves optimal bit allocation for a wide range of audio signals. As a result, high quality sound is achieved at high compression levels of 1/20 the original sound source.

A technology is used which doubles the compression ratio compared to ATRAC3 without loss in sound quality
Improved compression with minimal loss in sound quality is achieved through the analysis of audio signals in a division of 16 sub-bands.

High quality sound is maintained by enabling concentrated bit allocation to a channel with higher power.

go to http://www.sony.net/Products/ATRAC3/atrac/index.html
for more info on Sony's new propiatary mp3 like audio compression format

It's kinda been around for a few years, on most Sony "MP3" players. The sound quality isn't so bad, but it's not any better than MP3, and that says a lot about it's lack of quality.

i thought so to. They said Atrac was around for a while, but Atrac3 was something new. I am going to stick with Ogg and Mp3 anayways, I just don't trust sony