We can transcode videos to save space, what about pictures?

You are probably doing it without noticing. JPEG is a compression standard. you can take a png and turn it into a jpeg only half its size if your lucky. And in case you like simple line art, SVGs have even smaller filesizes.

Use JPEG XL if you really have to, it's modern and good.

I mean we already do.

Digital images have used compression since forever.

The usual formats are all about compression choices. Jpg, png, tiff, webp, etc

https://shotkit.com/image-file-formats/