The current standard image-compression approaches rely on fairly simple predictions, using either block- or wavelet-based methods. While many more sophisticated texture-modeling approaches have been proposed, most do not provide a significant improvement in compression rate over the current standards at a workable encoding complexity level. We re-examine this area, using example-based texture prediction. We find that we can provide consistent and significant improvements over JPEG, reducing the bit rate by more than 20% for many PSNR levels. These improvements require consideration of the differences between residual energy and prediction/residual compressibility when selecting a texture prediction, as well as careful control of the computational complexity in encoding.