Digital Music, or commonly known as digital audio, is a method of representing sound as numerical values. In contrast, analog systems like, magnetic tape, or vinyl records, rely on physical methods to reproduce the sound.
Physical Digital Media
One of the most well known physical sources of digital music is the compact disc. The basic principle of how this works is that a laser reads the surface of a CD which contains pits and lands. The information on the CD changes the reflected power of the lazerbeam which is measured and decoded as binary data ( 1 or 0).
Digital Audio Files
These are non-physical sources of digital audio that use various encoding formats to store audio information. An example of a digital audio file is an MP3 that you can download from the Internet; listen to on your computer, or MP3 player. When we talk about digital music, we normally refer to this type of digital audio storage; other examples of digital audio files include, AAC, WMA, OGG, WAV, etc.

