MP3
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MP3 is a lossy audio file format used by all of Valve's engines, and is available in all first-party titles. While engine limitations prevent it from being used for everything that WAV files can be used for, its smaller file sizes make it suitable for non-looping music or incidental ambient sounds in a soundscape.
Recommended minimum bitrates
Unlike WAV, MP3 supports arbitrary bitrates, independent of sample rate and channel count. While this improves scalability, going below certain bitrates will result in noticeable quality degradation. Below are recommended minimum bitrates for the sample rates supported by 
Source.
| Sample rate | Mono (1 channel) | Stereo (2 channels) |
|---|---|---|
| 11025 Hz | 32 kbps | 64 kbps |
| 22050 Hz | ||
| 44100 Hz | 64 kbps | 128 kbps |
Tip:These are just minimums. If you have the space to spare, you can go up to 320 kbps for higher quality audio!