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mp3's are the compression format that ipod's read. to put it into perspective, an mp3 is like a word document while an ipod is like the computer. make sense that way?
as far as 'cheaper' depends on what ipod you get, it can be cheaper, about the same or more
Ipod is tradmarked by Apple computer. From what I understnad you are limited to apple downloads for music at .99 cents each song, or you can save your own cd music to the Ipod as well.
I have a Dell and a Gateway MP3 player, I have a membersip to Napster which allows me to download unlimited songs at no additional cost, less the $14 / month fee. On two players. The catch is I have to plug the MP3 player in once a month to keep the songs I have downloaded active, there is a timer that will deactivate your songs after 30 days. Any thing I add to my units of my own, or that I purchase of course are mine forever.