File Extension
.mpg is one of a number of file extensions for MPEG-1 or MPEG-2 audio and video compression. MPEG-1 Part 2 video is rare nowadays, and this extension typically refers to an MPEG program stream (defined in MPEG-1 and MPEG-2) or MPEG transport stream (defined in MPEG-2). Other suffixes such as .m2ts also exists specifying the precise container, in this case MPEG-2 TS, but this has little relevance to MPEG-1 media.
.mp3 is the most common extension for files containing MPEG-1 Layer 3 audio. An MP3 file is typically an uncontained stream of raw audio; the conventional way to tag MP3 files is by writing data to "garbage" segments of each frame, which preserve the media information but are discarded by the player. This is similar in many respects to how raw .AAC files are tagged (but this is less supported nowadays, e.g. iTunes).
Note that although it would apply, .mpg does not normally append raw AAC or AAC in MPEG-2 Part 7 Containers. The .aac extension normally denotes these audio files.
Read more about this topic: MPEG-1
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