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This file compression method obtains a high compression ratio when used with detailed photographic images (its intended use). It is not a good compression choice for images with a small number of colors and high contrast edges, or for color-mapped data. Part of JPEGs success in high compression is due to the fact that it is a "lossy" compression method, meaning that the compression results in the loss of some data that is determined to be unimportant or unnecessary. This does not necessarily result in a visible reduction of image quality.

JPEG is highly flexible - it allows you to make a "quality" setting that determines the amount of loss that occurs and affects the size of the resulting compressed file.

The JPEG algorithm takes into account that the human eye is more sensitive to changes in brightness than to number of colors. Rather than saving the color data from each pixel in an image, it saves information on the rate of change of color, or "frequency information." More loss is allowed in the color data than in the brightness data. Some of the compression of the color is achieved by converting the RGB values to YCbCr color scheme. ImageGear supports two other JPEG compression modes, as described in the following sub-sections: