JPG Compression, a wonderful commodity
JPG images are good when it comes to compression. The best lossless (image quality) compression for photographic based JPGs I could achieve was 2:1 with no effect on image quality. I found most photographic based JPG images can achieve a compression ratio of anywhere from 10:1 to 25:1 - without visible loss in image quality. Although when trying to compress non-photographic images, such as screenshots from Windows, the loss in image quality becomes more noticeable than ever.
The first image below is the original image (2:1) and the image below it is has been compressed to a ratio of 25:1 using Paint Shop Pro 7 by Jasc Software - I'll explain how to physically compress images shortly.
Original Compressed Image (2:1) - 61.3kb
Highly Compressed Image (25:1) - 16.7kb
As you can see from the 25:1 compressed image above, there is really not much of a difference in terms of image quality from the original image at 2:1 - but a save of 44.6kb in file size. Consider this as a practical example - a new piece of content you post has ten images in it, for simplicity reasons at 63.2kb each (632kb in total), we save a total of 465kb, seemingly not a great deal on an individual basis.
Now say 2000 different people read that same review uncached, we save a total of roughly 908mb in outbound data bandwidth for that single review. If 5000 people were to read that review, we are talking gigabytes of bandwidth which can be saved through compression, 2.27gb to be exact. I'll let the stunning numbers speak for themselves.
The only time you really notice the compression is when you zoom in on images, but since JPG images on the net are usually static, this is not an issue we have to worry about.