Compression depends on patterns being present in the information. This is true of text, image, video or music data. A pattern implies that some of the data is identical or very similar. For example, a text file that contains the same statement over and over again.
The original data file has 100 words in it. But the information (as opposed to the data) is really only the first sentence containing the ten words "All work and no play makes Jack a dull boy". This sentence is repeated 10 times.
A text compression algorithm would spot this pattern and create a file that effectively only contains the first 10 words plus some instructions about repeating it.
Therefore 100 words becomes 10 along with a few additional details. As a result, this has compressed the file by a factor of almost ten.
The efficiency of compression is a simple formula: -
Compression is also used by video and music streaming services to reduce the bit rate per second. The compression formula then becomes