There are various kinds of audio codecs available. Since these codecs have been implemented by different algorithms by number of companies; they have different specification and application in various fields. These audio codecs generally complies Industry standards.

The various software audio codecs are:

• AAC
• AAC+ / AAC+ Enhanced
• AC3 or Digital Dolby
• Digital Dolby Plus
• Speex
• FLAC
• MIDI
• MP3
• MP3 Pro
• Monkey’s audio
• Ogg Vorbis
• QCELP
• Real Audio
• WMA
• Melody
• HVAC

These various Audio codecs are technically differentiated from each other based on various factors which includes compression technology / algorithm, platform supported, sampling, OS supported etc

One can easily compare the various audio codecs on wikipedia. But still there is confusion which codec is the appropriate? However it also depends on application. But understanding pros & cons of some of these codecs gives us the better information and insight depth.

AAC

Pros

1. An international standard approved by the ISO
2. Flexible: supports several sampling rates (8000-96000 Hz), bit depths, and multichannel (up to 48 channels)
3. Several implementations, including free and high quality ones.
4. Reaches transparency in most samples and for most users at around 150 kbps
5. Part of MPEG-4 specs
6. Anyone can create its own implementation (specifications and demo sources available)

Cons

1. Problem cases that trip out all transform codecs
2. Heavily patented
3. Increased complexity
4. AAC comes in different “flavors” (object types: AAC LC, AAC HE, AAC PS etc.).
5. Many (especially portable) players only support LC (at the moment) so you can have files that are valid but your player won’t play them.

AAC+ / Enhanced AAC

1. AACplus (AAC+) is a variant of AAC which is optimized for low bit rates developed by Coding Technologies. It uses techniques including SBR (Spectral Band Replication) and PS (Parametric Stereo).
2. Multi-channel support for 5.1, 7.1 and beyond (48 channels total)
3. Optimized speech, mixed speech/music down to 8 kbps mono

AC3 / Digital Dolby / Digital Dolby plus

Pros

1. Digital Dolby or AC3 decoder is the industry standard for DTV and DVD media. Nearly all new DVD movies come with a DD soundtrack program
2. AC-3 provides only full range channels, its sound is really much better in terms of quality. And it is also backward compatible.
3. Digital Dolby plus also supports 7.1 channel

Cons

1. Max support for 5.1 channel audio CDs, limited to 448 kbps maximum for Digital Dolby

SPEEX

Pros

1. Speex is an Open Source/Free Software patent-free audio compression format
2. Speex is based on CELP and is designed to compress voice at bitrates ranging from 2 to 44 kbps
3. Speex has a number of features that aren’t in other codecs such as Intensity stereo encoding, integration of multiple sampling rates in the same bitstream, and a VBR mode

Cons:

1. Speex is mainly designed for only three different sampling rates: 8 kHz, 16 KHz & 32 KHz

FLAC

Pros

FLAC is portable to many systems

1. Open source and freely licensed
2. The encoding of audio data incurs no loss of information.
3. Hardware support & Streaming support
4. Extremely fast decoding
5. Supports multi channel and high resolution streams
6. Supports Replay Gain & cue-sheet (with some limitations)
7. Gaining wide use as successor to Shorten

Cons:

1. Compresses less efficiently than other popular modern compressors (Monkey’s Audio, OptimFROG)
2. Higher compression modes slow, for little gain over the default setting.

MP3

Pros

1. Widespread acceptance, support in nearly all hardware audio players and devices
2. An ISO standard, part of MPEG specs
3. Fast decoding, lower complexity than AAC or Vorbis
4. Anyone can create their own implementation (Specs and demo sources available)
5. Relaxed licensing schedule

Cons

1. Lower performance/efficiency than modern codecs.
2. Problem cases that trip out all transform codecs.
3. Sometimes, maximum bitrate (320kbps) isn’t enough.
4. No multichannel implementations.
5. Unusable for high definition audio (sampling rates higher than 48kHz).

OGG VORBIS

Pros

1. (Ogg) Vorbis specification is in the public domain; it is free for commercial or noncommercial use, under both (LGPL and BSD licenes)
2. Easy to use high-level API (Application Programming Interface)
3. Good all-round performance (>48 kbps – a leading codec at 128 kbps)
4. Well written specs
5. Supported by most portable (Ogg) DAPs
6. Suitable for internet-streaming (via Icecast and other methods)
7. Fully gapless playback
8. High potential for further tuning
9. Structured to allow the design for a hybrid filterbank

Cons

1. Limited official development (third-party developement is always encouraged)
2. Current implementations are more computationally intensive to decode than MP3

To commercialize these audio codecs couples of sites are available such as design-reuse, chipestimates, IPsupermarket.com which allows you to buy/sell or license these codecs.