This is one of those topics that keeps coming up. Almost all digital files are “compressed” formats. Which means they have “zip-like” functionality built-into them. With Zip, or Windows Compress, if you zip a document, or a file — when you unzip it, you get the same exact file back (hopefully). Well this is not true for most digital media formats, such for Audio, Video, or Pictures. These lossy formats actually throw away information to make the file smaller. You can never get that original data back. Now let’s admit — most people cannot tell the difference in listening to a MP3 (lossy audio format) of “Smoke on the Water” or the originally recorded digital CD. That’s because most of the information that was thrown away by the conversion was outside of our listening area. Yes some of it was outside of hearing range as well, but most of it is actually inside of what we can hear but don’t usually listen to, specially where there is something more interesting going on.
So what does this all have to do with images and photographs? Well most of the formats that we use are also lossy formats. JPEG is a HUGE lossy format, GIF is even worse. Jpeg actually has 100 levels of lossy. from 1 to 100. 100 being the least lossy, and 1 you won’t recognize your image from the source. The trick with jpeg is to lower the quality enough so that you can’t tell that it was shrunk down — usually between 60-75 (6-7 as some programs refer to the scale).
Formats such as Raw files (CR2[Canon Raw], NRF[Nikon Raw], DNG[Adobe DigitalNegative]) are lossless formats, which means they’re much larger. TIFF and PNG are also two types of lossless formats. Right now everything I shoot is Canon Raw, which is then converted to a DNG for store and archival. I think it’s always better to have 100% of the data in our raw file and in Lightroom it’s breeze to create any size, spec JPEG I need as an output.