File compression is used for many things, from transporting large files to squeezing more mp3s onto your iPod.
When using compression on large high quality files, you are likely going to want to be able to uncompress the files to their original state, so no audio or data quality is lost, this is where Lossless compression is used.
For simply creating some tracks to listen to on your iPod through your standard iPod headphones, then the audio quality reduction is not as important and therefore Lossy compression can be used.
Lossy compression is able to reduce a file down to a much smaller file size than lossless, due to the nature of how it works.
How does it work?
Compression uses many factors to reduce a files size, these factors include utilising psychoacoustic principles; to reduce the size of an audio file in areas that are unnoticeable to the human ear, and data reduction. Without going into too much detail, imagine you have an original data stream that reads:
In order to truncate the data stream so that it can be fully restored at the other end, lossless compression will create a stream that reads:
Read as five, five sixes, seven, one
Allowing for the transporting file to have reduced file size, while still allowing the original file to be available the other end.
With lossy compression the same data stream:
Would simply be compressed to:
The file size is smaller but the original data is now gone forever. This is why lossy compression is able to compress to smaller file sizes then lossless.
Lossy file formats include:
MP3, MP4, AAC, WMA, Ogg and image formats such as JPEG (can be lossy or lossless).
Lossless file formats include: