As for bitrate...IMO, a JPEG. Take an image. A photo maybe. Get like 10:1 compression (pretty good, actually). Then save it as another image, but with much more compression. It aught to look much worse right there. Use a zoom in on a portion, then the whole image (IE, zoom in you see it's missing a ton, zoom out and you barely see it).
You're not worried about the hard drive, but the file system. It's a big cluttered filing cabinet (actually, it tends to be a very organized one, but...). You open a drawer, and there's stuff there. If there's empty space, you can put new stuff in. If not, you have to take stuff out. When playing, you have a paper out of one of the folders and are reading it.