Do you wonder why some edit systems are so expensive? How can companies like Quantel, Discreet, Avid and others get away with selling something for about ten times what logic dictates would be a fair price? Well, there's a strange formula at work here -- one that suggests that some of these high-end editing and compositing boxes are not expensive enough!

Here's how the formula works: The amount you can charge customers for an edit hour is directly related to the cost of your equipment. If the cost of the equipment is high, then the per-hour rate is high. And, if the per-hour rate is high, then anyone who gets commission for selling this time gets more money. That goes for sales staff working on commission in an edit facility, ad agency reps, and so on.

Now let's not forget that the cost of equipment is also related to its capabilities. For instance, you're not going to get HD compositing that renders quickly with all the whistles and bells for a cheap price (although those capabilities are getting lower-priced every day). You won't get intricately detailed color correction in real time for nothing. Most importantly, you won't get the best editor in town for a few bucks an hour. And the truth of the matter is, most of the time, the best editors are working on the most expensive equipment with the most sophisticated capabilities. You get what you pay for.

Or do you? Couldn't you just put together a suite of your own, with uncompressed editing, killer effects and great compositing for less than $20K? Sure. But you wouldn't be running with that stratospheric high-end spot production crowd. They won't even consider you for their next project. They go for the highest-end, most expensive equipment, just because they can. They've heard that all the best spots are produced on, for example, Discreet Inferno and they're not going to settle for anything less. Their productions are on a much grander scale that that of us mere mortals. Think of it: If a spot will end up on the Super Bowl broadcast, where ad rates this year topped $2 million to air one thirty second spot, what's an extra $100K for editing? The budgets for these kind of spots allow for this sort of thing.

Now let's look at this from the perspective of the manufacturer of these oh-so-special editing and compositing devices. Say you make a great edit box and you're selling it to post-production houses in large markets for $100K per unit. Edit House "A" bought five units from you a few months back, and charges its customers, say, $400 per hour for using one. Then, some big-mouth editorial writer criticizes your company for price gouging, selling an edit box for $100K that may have cost you $30K to ship, including development costs. Embarrassed, you sheepishly lower your price for that box to $50K -- half its original price. You figure you'll sell twice as many boxes, right? Maybe so, but you have a new problem now. All of the thousands of customers who bought that same exact unit for $100K now want you dead. Among those seething, would-be murderers is Edit House "A, " who notices another edit house ("B") opening down the street, charging half its hourly rate. How can Edit House "B" do this? He bought that equipment for $50 instead of the $100K paid by Edit House "A", of course. As a manufacturer, you have just hurt all your existing customers -- not a good idea if survival is on your list of priorities.

So here we have a ritzy club of well-heeled edit house players paying self-perpetuating high prices for the latest equipment, and they're perfectly content for it to stay that way. The market will bear hourly rates that are high enough to make buying pricey edit gear an extremely lucrative enterprise. It reminds me of that famed $900 toilet seat that the US military pays for on a regular basis. The upside of this is that companies that develop these high-end editing, effects and compositing systems use these boatloads of cash to finance the development of even cooler tools, and eventually these innovations trickle down to more reasonably-priced systems for those of us with feet planted on solid ground. Fine by me. The deepest pockets finance the revolution for the rest of us. And they'll keep digging deep into those war chests, because they like it that way. So do we.

Charlie White has been writing about new media and digital video since it was the laughingstock of the television industry. A technology journalist and columnist for the past eight years, White is also an Emmy-winning producer, video editor and shot-calling PBS TV director. Talk back -- Send Chazz a note at cwhite@digitalmedianet.com.