You can use two sound formats, WAV and MP3, for music it only exists the last one. MP3 allows neat compression level towards not bad quality. I suggest you using maximum 96 kbit quality. It provides good quality/size relation. To encode music in these settings, you need any program that allows you to encode MP3 files, like LameXP, WinLAME (mentioned by rage) or so. You can encode music to 64, 56 kbit, and compare their quality and choose which fits your needs best.