"Lossless" compression is based on information that can be discarded without negative consequences because it cannot be perceived by humans. The data is real and there, you just can't see it or hear it. If you can quantify what information humans can't perceive, you can discard it, leaving less data and possibly more amenable data for a subsequent lossless compression phase. MP3, JPEG, MPEG all benefit from this understanding of the human perceptual system.