By using lossy formats it enables even dial up users to download mp3 files at a reasonable speed. The reason lossy formats are used over RAW is that RAW audio files are too large to travel over the internet at any great speed. In other words, that means it removes the information that your ear doesn't notice thereby making the file smaller. Instead, MP3 files use perceptual coding. That means that an MP3 file does not contain 100% of the original audio information.
This then enables you to get hundreds of songs on to a CD and it also has opened up a new market over the internet - the download market as download times have been significantly reduced. MP3 gets rid of a lot of the information recorded in a song that our ears are not able to hear and then uses complex algorithms to reduce the file size. MP3 is a digital music format which allows CD tracks to be reduced to around a tenth of their normal size without a significant loss of quality.
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