From Hydrogenaudio Knowledgebase
Apple Lossless (also known as Apple Lossless Encoder, ALE, or Apple Lossless Audio Codec, ALAC) is a Lossless audio codec developed by Apple Computer.
Apple Lossless data is stored within an MP4 or MOV container with the filename extensions .m4a or .mov. It is not a variant of AAC, but a totally new codec. Apple iPods with a dock connector and recent firmware can play Apple Lossless encoded files. It does not utilize any DRM scheme, but by the nature of the container, it is thought that DRM can be applied to ALAC much the same way it can with other files in QuickTime containers.
Apple claims that audio files compressed with its lossless codec will use up "about half the storage space" that the uncompressed data would require.
The Apple Lossless Encoder was introduced as a component of QuickTime 6.5.1 on April 28 2004 and thus as a feature of Apple iTunes 4.5. The codec is also used in the AirPort Express's AirTunes implementation.
David Hammerton and Cody Brocious have analyzed and reverse-engineered this codec without any documents on the format. On March 5 2005 Hammerton published a simple open source decoder in the C programming language on the basis of their work.