I don't think it compresses - at least I don't see the option there. It's great for simple backups, but not for compression... I do have to say, though, I'm not sure compression would do you much good with your plan. Music, if in MP3 or AAC form, already _is_ highly compressed, and trying to zip or stuff those files would actually make those files larger. Same goes for JPEG images. All you'd get would be a longish compression process not actually saving much space.
Compression is good for text files, Photoshop and InDesign files or similar. But if you only think about media files which are already compressed - compression doesn't work for backups.