CNET GLOSSARY: Terms for the techie
A method of file compression in which some data in the original file is lost when the compressed file is restored. With graphics, video, and audio files, a certain degree of lost data won't be noticeable, so many of those file formats use lossy compression (JPEG is an example). The advantage of lossy compression is that it reduces the size of the file (partly by by eliminating redundant data), so the compressed file is even smaller. Also see lossless compression.
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