As seen in the following diagram, the process of MP3 compression can be broken down into steps. First, the input audio stream passes through a filter bank that divides the sound into subbands of frequency. Simultaneously, it passes through a psychoacoustic model that utilizes the concept of auditory masking to determine what can or cannot be heard in each subband. The bit allocation block minimizes the audibility of noise. Finally, the bit stream formatting block accumulates all the information and processes it into a coded bitstream (Pan 2).

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