So what does data compression actually do? Lossy data compression actually dynamically eliminates frequencies from the audio that the ear won't notice based on an algorithm. It's throwing away data that hoping that you won't miss in order to get the file size smaller.
How much data? Well it could be a lot and it could be a little, depending upon the algorithm and the data rate you select.
Here's a great real world example where you can actually hear the data that's been eliminated using Suzanne Vega's "Tom's Diner." First you'll see and hear the original music video, then just the data that's been eliminated. It was created by Ph.D. candidate Ryan Maguire at the University of Virginia for a project called The Ghost In The MP3.
As a bonus, you'll also see what the video codec does to the video as well.
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