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PC Magazing has a good article on Photos in the RAW which explains some of the implications of Shooting in RAW format...
Many midrange and high-end digital cameras offer the option to save photos in RAW format instead of JPEG. If your camera can do this, you've probably wondered what the RAW format's strengths are and whether you should try it. We'll walk you through how and when to shoot RAW, and how to make the most of your RAW images.
A RAW file is the unprocessed image data as captured by the camera's sensor. It is the photographic equivalent of the image captured by your eyeball before your brain has had a chance to process it. (See the example of RAW data together with the image of a race car in Figure 1 .) Unlike a JPEG, for which your camera itself processes the image data before you ever view it, you must do all the processing of RAW files on your computer. This lets you fully customize settings, including white balance, sharpening, and tone. You can do some exposure correction, but you're still limited to what was captured in the initial image. RAW files also avoid the artifacts associated with JPEG compression. This isn't much of an issue unless you enlarge your prints to poster size or crop them quite a bit, but for purists, RAW preserves every bit of the original image, acting as a digital negative."
Posted by Darren in our Tips category on August 04, 2004