What is FLAC? FLAC is another losslessly compressed file format, like SHN. It has gained popularity because 1) it compresses a little better than SHN, and 2) because it is open source. There are even some portable audio players (AKA MP3 players) that now support FLAC files, like some of the RIO models.
You can read all about FLAC and get the necessary software here: