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I wouldn't say they look awful, there's a difference in the background part of the image but the main focus has little change.

It's a trade-off, but I would imagine that if there's thousands of files it could be a significant savings on bandwidth, and you could always keep the original for download but not display puroses.

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There's very clear posterization in the yellow die and in the green die's highlights.

That shouldn't be surprising -- high color depth images need more than 256 colors to represent their image with fidelity.

See more: http://en.wikipedia.org/wiki/Posterization

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