When you purchase a song you are asked what format and quality you want to use.
Typically we have been using: MPEG4-Extreme VBR.
This uses the Advanced Audio Coding (AAC) compression format which is supposed to be better than MP3 for music at similar bit rates.
VBR stands for Variable Bit Rate, which improves the quality of music by using a higher bitrate (and therefore more storage space) to be allocated to the more complex segments of media files while less space is allocated to less complex segments.