Bit-rate reduction of an image signal by powerful algorithms that compress beyond what is achievable in lossless compression, or quasi-lossless compression. It accepts loss of information and introduction of artifacts which can be ignored as unimportant when viewed in direct comparison with the original. Advantage is taken of the subtended viewing angle for the intended display, the perceptual characteristics of human vision, the statistics of image populations, and the objectives of the display. The lost information cannot be regenerated from the compressed bit stream.