Symptom #1: Areas of Flat and Gray Footage
"Some bright areas of my footage look flat and gray when I color correct them."
This type of distortion, or clipping, occurs any time your luminance levels exceed the highest possible value of the system you are working with. If you stay between 0 and 110 IRE, you can see values in luminance change. But you can't get any brighter than 110 IRE and once you hit that wall, you'll see clipping.
When you have no detail in an area of the frame, you can actually see banding, or an area clearly differentiated from other areas of the frame where there is detail. Although you want to color correct the footage and bring the luminance levels down for these over-exposed areas of the frame, it is impossible because an area of zero detail can only get darker. If you clip, the detail in that area of the frame is lost forever. If you see your video levels bunching up around the top of the Waveform monitor in the FCP Toolbench, you probably have clipping and have lost detail in that area of the frame.
There are two ways to deal with the problem of clipping. First, avoid illegal values when shooting video. Although the DV format can record up to 110 IRE, that's 10 points above legal. You can use the zebra stripes in your camera to identify luminance values above 100 IRE so that anything you shoot is guaranteed to be within the broadcast-legal range from the moment you tape it.
Another method is to use color correction in FCP. Since you can shoot into the extended 110 IRE range that your camera is capable of recording, this gives you more exposure latitude, or a greater range of exposure values. Although you are recording detail that is above legal, you can use color correction tools in FCP to pull that illegal luminance back down into range. As long as you do not clip your whites, you can easily pull down values up to 109 IRE back down into a legal range.
Symptom #2: Black Isn't a True Black
"My blacks aren't black; can I have true blacks in video?"
"I've been color correcting black to a 7.5 IRE setup, but my blacks just get washed out."
The bottom end of the luminance scale is known as black level. Just like 110 IRE is the absolute brightest white value that can be recorded before clipping, 0 IRE is the darkest black that can be recorded. Clipping black levels is usually referred to as "crushing the blacks." When you crush the blacks, you create areas of the frame with no detail. Although true black, like you see in film, isn't really possible (because of the difference between the way film celluloid and video tubes make light), you can get decent blacks in video that resemble the look of film properly transferred to video.
DV's 0 IRE value is actually illegal in the NTSC world (with the exception of Japan).
For PAL and Japanese NTSC users, 0 IRE is correct. But if you use NTSC and you're not in Japan, the true nominal black level is set at 7.5 IRE. This is a vestige of the analog video broadcast system. The range of IRE levels between 0 and 7.5 created problems in the luminance and refresh of a frame, and so the legal bottom level for blacks was established at 7.5. The range between 0 and 7.5 was called the setup and made off-limits to broadcast-legal signals.
Of course, now that we are in a mostly digital world, that black level interference in the analog video signal is not a problem. In fact, it only becomes an issue when a piece of video is broadcast. Video cameras and all but the most expensive professional digital video decks ignore it completely.
Like extending the exposure into the illegal luminance range of 110 IRE, NTSC users should consider allowing black levels to dip below 7.5 IRE when shooting footage. When generating footage with a DV camera, you want to set true black levels all the way down to 0 IRE. And while your footage is in post-production, you want to continue to use 0 IRE as your black level, correcting true blacks by extending them down to 0 IRE.
The right time to add setup, or adjust IRE, is when you're encoding video in the NTSC analog format, which displays black at 7.5 IRE.
Most DV decks do not add setup at the analog outputs. If you need to provide analog tape dubbed from a digital video source, and you know that you need to add setup to it, your system may require the addition of a Proc Amp Time Base Corrector or some other analog adjustment device, as well as the addition of a true analog Waveform monitor to measure the setup signal accurately.