Good Free (open standards, open source, and no $) codec that does what MP3's/MP3Pro'
s do is Ogg Vorbis.
It's a high quality lossy codec. It's one thing that is does is have a variable bitrate, were instead of "hey I encoded it at 128bit rate", you encode on a sliding scale of quality. Most encoders will aim for 128bit/s (for example) but it will vary from 100bit/s to 130-140bit/s depending on the amount of information that has to be encoded. That way it encodes the highest quality amount of sound at the smallest amount of bandwidth.
Plus it's encoding sceme is just plain better then mp3's. At bitrates higher then 128 or so it's hard to tell much of a difference, if any it's going to be in OGG's favor. But as you get into higher and higher compression (smaller files/lower bit rates) is when OGG stands out.
i don't know how it stands up to MP3pro, though. They are probably very close in quality (as far as I can tell).
The main difference is that you can design encoders and encoders, sell them, give them away, and make music using them and never have to owe money to anyone or ever worry about any liscencing issues.
One famous use for Ogg is that UT2004 uses ogg for it's music and you can add your own music to the game using it.
There are other free encoders. For instance you have FLAC, which is a lossless compression sceme like (for example) zip. It will always give you 100% quality, unlike Ogg/MP3/MP3Pro which discard information to acheive high compression rates.
With MP3's and other lossy formats you risk loosing much of the nuance to the sounds. You loose the little auditory signals and information that you pick up semi-consiously to determine things like spatial/stereo effects.
Then you have other utilitarian codecs like Speex. Speex is specificly for heavily encoding speech while still having high quality and wouldn't be good for music.
Here is a good page for learning about open source encoding/ripping-style software, it's definately not all there is though.
Also keep in mind that Ogg is a container, Vorbis is the actual codec. Ogg streams usually are sending vorbis music, but you can also send Flac, speex and video streams using it.
For simplisity sakes though people just generally refer to Ogg Vorbis as just ogg files. And mime types would generally be application/ogg.