Audio
Lossy audio compression typically works with a psychoacoustic model—a model of human hearing perception. Lossy audio formats typically involve the use of a time/frequency domain transform, such as a modified discrete cosine transform. With the psychoacoustic model, masking effects such as frequency masking and temporal masking are exploited, so that sounds that should be imperceptible are not recorded. For example, in general, human beings are unable to perceive a quiet tone played simultaneously with a similar but louder tone. A lossy compression technique might identify this quiet tone and attempt to remove it. Also, quantization noise can be "hidden" where they would be masked by more prominent sounds. With low compression, a conservative psy-model is used with small block sizes.
When the psychoacoustic model is inaccurate, when the transform block size is restrained, or when aggressive compression is used, this may result in compression artifacts. Compression artifacts in compressed audio typically show up as ringing, pre-echo, "birdie artifacts", drop-outs, rattling, warbling, metallic ringing, an underwater feeling, hissing, or "graininess".
A good way to observe compression artifacts in audio is to listen to the applause in a relatively highly compressed audio file (e.g. 96 kbit/sec MP3). In general, musical tones have repeating waveforms and more predictable variations in volume, whereas applause is essentially random, therefore hard to compress. A highly compressed track of applause will illustrate the "metallic ringing" and other compression artifacts very well.
Read more about this topic: Compression Artifact