Horrible Quality Album Thumbnails

So I view the site on a reasonably large monitor and what I am finding is that album covers and thumbnails for images in albums are horribly pixelated.

I don't understand why this is happening as in order to create the thumbnails the images are being shrunk not enlarged so the pixelation seems very strange.

is there somewhere I can set parameters for this.

See this video - https://www.screencast.com/t/3lLmOhABK