Remember PKZip?

Even if you haven't been around computers long enough to remember the zip file-unzipping freeware named PKZip, there's a chance you'll enjoy reading this whitepaper describing the basics behind file compression:http://www.pkware.com/documents/resources/whitepapers/ROI.pdf

The author of PKZip also has a tragic, but interesting bio available from wikipedia.
Another link in case you want to learn more about the author (with the initials PK :), Phil Katz.