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Yes, you do need to hook it up directly to the PC. That being your camera via the DV cable to the PC. BTW, "DV" means Digital Video. This is normally reffered to as a firewire cable. However, some cameras allow for a USB hookup also, so it depends on the camera and cable you have. Most likely you will need a firewire hookup, and you can purchase a add-in PCI firewire card for very little money.
What will happen is that when you run the editing program on your computer it will talk directly with the camera, syncronize themselves together, and allow to capture from the camera, or edited directly on the camera before capturing to the PC. Also, anything you do on the camera, such as putting in a time code, a space, deleted a scene, anything, will be accessible via the PC, but only if you use the DV or firewire cable. One feature of firewire is time encoding. Whatever you capture from the camera will have the exact time coding that is listed on the camera itself. Say you want to edited your video at 2min30seconds. No problem. Just run the editing program, go to that time, and edit away.
Just one note: be aware that it is best to capture the video from the camera first, then edit it so that the video on the camera itself doesn't get messed up. But again, you could edit the video directly on the camera if you so choose. It's all up to you.
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