The encoding scheme used in Sony's MDLP system for MiniDisc recorders, ATRAC3 is mostly based on Sony's ATRAC2 encoding scheme which was developed for but never used in an MD music recording product. The main difference technically between ATRAC3 and ATRAC2 is that ATRAC3 uses the original ATRAC1's Quadrature Mirror Filter (QMF) for band splitting, as opposed to ATRAC2's Polyphase Quadrature Filter (PQF).'s MDLP FAQ (upon which the technical details of this writeup are based) suggests that the naming of ATRAC3 may have also had something to do with the popularity of MPEG1 Audio Layer 3 (MP3) as well as the fact that it was the next generation.

Source: MLDP FAQ -

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