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A Raw file is…

• not an image file per se (it will require special software to view, though this software is easy to get).
• typically a proprietary format (with the exception of Adobe’s DNG format that isn’t widely used yet).
• at least 8 bits per color – red, green, and blue (12-bits per 
X, Y, location), though most DSLRs record 12-bit color (36-bits per location).
• uncompressed (an 
8-megapixel camera will produce a 8 MB Raw file).
• the complete (
lossless
) data from the camera’s sensor.
• higher in dynamic range (ability to display highlights and shadows).
• lower in contrast (flatter, washed out looking).
• not as sharp.
• not suitable for printing directly from the camera or without post processing.
• read only (all changes are saved in an XMP “sidecar” file or to a JPEG or other image format).
• sometimes admissible in a court as evidence (as opposed to a changeable image format).
• waiting to be processed by your computer.


In comparison a JPEG is…

• a standard format readable by any image program on the market or available open source.
• exactly 8-bits per color (12-bits per location).
• compressed (by looking for redundancy in the data like a ZIP file or stripping out what human can’t perceive like 
  
a MP3).
• fairly small in file size (an 
8 megapixel camera will produce JPEG between 1 and 3 MB’s in size).
• lower in dynamic range.
• higher in contrast.
• sharper.
• immediately suitable for printing, sharing, or posting on the Web.
• not in need of correction most of the time (75% in my experience).
• able to be manipulated, though not without losing data each time an edit is made – even if it’s just to rotate the 
   image (the opposite of
loss less
).
• processed by your camera.


These differences lead implicitly to situations that require choosing one over the other. For instance, if you do not have much capacity to store images in camera (because you spent all your money on the camera body) then shooting in JPEG will allow to capture 2 or 3 times the number you could shooting in Raw. This is also a good idea if you are at a party or some other event after which you want to share your photos quickly and easily. On the other hand, if capacity is not an issue at all (1 GB and 2 GB flash cards are getting cheaper every week) you might consider shooting in Raw just to cover all the possibilities. If you cannot or do not want to do any post-processing, then you simply have to shoot in JPEG.


Taking a picture in Raw is only the first step in producing a quality image ready for printing. If on the other hand, quality is of the utmost importance (like when you are shooting professionally), and you want to get every bit of performance your DSLR can offer then you should be shooting in Raw.


That being said, I know many professional photographers who do not shoot in Raw for one of two reasons: 1.) they don’t know how, or 2.) they don’t want to take the time to process the images afterward.


Shooting in JPEG

When you shoot in JPEG the camera’s internal software (often called “firmware” since it’s part of the hardware inside your camera) will take the information off the sensor and quickly process it before saving it. Some color is lost as is some of the resolution (and on some cameras, there is slightly more noise in a JPEG than its Raw version). The major factor in this case, is the Discrete Cosine Transformation (or DCT) which divides the image into blocks (usually 8×8 pixels) and determines what can be “safely” thrown away because it is less perceivable (the higher the compression ration/lower quality JPEG, the more is thrown away during this step). And when the image is put back together a row of 24 pixels that had 24 different tones might now only have 4 or 5. That information is forever lost without the raw data from the sensor recorded in a Raw file.

Shooting in Raw

If you do shoot in Raw, your computer rather than the camera will process the data and generate an image file from it. Guess which has more processing power: your digital camera or your computer? Shooting in Raw will give you much more control over how your image looks and even be able to correct several sins you may have committed when you took the photograph, such as the exposure. To take advantage of this you will certainly need to use some software on your computer to process the files and produce JPEGs  If the white balance is off I have found that it is much easier to fix using the Camera Raw screen than loading the JPEG and manipulating that – the end result is much better as well. The richness, detail (sharpness), color range and ability to adjust these settings end up being so much greater with a Raw file, even though what a Raw file looks like before processing is anything but rich and sharp. 

The bottom line is only my eye can produce the correct white balance, contrast, brightness, etc…