Information Loss
Lossy compression formats suffer from generation loss: repeatedly compressing and decompressing the file will cause it to progressively lose quality. This is in contrast with lossless data compression, where data will not be lost via the use of such a procedure.
Information-theoretical foundations for lossy data compression are provided by rate-distortion theory. Much like the use of probability in optimal coding theory, rate-distortion theory heavily draws on Bayesian estimation and decision theory in order to model perceptual distortion and even aesthetic judgment.
Read more about this topic: Lossy Compression
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