The advantage of lossy methods over lossless methods is that in some cases a lossy method can produce a much smaller compressed file than any known lossless method, while still meeting the requirements of the application.

Lossy methods are most often used for compressing sound, images or videos. This is because these types of data are intended for human interpretation where the brain can easily “fill in the blanks” or see past very minor errors or inconsistencies. The compression ratio (that is, the size of the compressed file compared to that of the uncompressed file) of lossy video codecs is nearly always far superior to that of the audio and still-image equivalents. Audio can often be compressed at 10:1 with imperceptible loss of quality, and video can be compressed immensely (e.g. 300:1) with little visible quality loss. Lossily compressed still images are often compressed to 1/10th their original size, as with audio, but the quality loss is more noticeable, especially on closer inspection.

When a user acquires a lossily compressed file, (for example, to reduce download-time) the retrieved file can be quite different from the original at the bit level while being indistinguishable to the human ear or eye for most practical purposes. Many methods focus on the idiosyncrasies of the human physiology, taking into account, for example, that the human eye can see only certain wavelengths of light. The psychoacoustic model describes how sound can be highly compressed without degrading the perceived quality of the sound. Flaws caused by lossy compression that are noticeable to the human eye or ear are known as compression artifacts.

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