Photoshop xmp file folders

When I process a photo in Photoshop CC and save the picture to a folder, an "xmp" file is created along with the picture file itself. As I organize and move these processed pictures to other files, do I need to retain this xmp file? What exactly does it do?
thanks
Scott Ramsey

Yes, absolutely keep it.

When you edit a raw file, you NEVER technically modify the raw file itself. The pristine original Raw file is always kept, untouched. When you make edit changes, white balance, exposure, cropping, whatever (anything you do), what is saved is simply a LIST of those edits or changes that you specified. This list goes int that xmp file. If you open the file later in the Raw editor, those changes from your list are preset and shown to you. If you edit it a second time, you only change the list instructions - which is lossless editing. You can undo any change, which just removes the list item. You can uncrop, and get back all of your original image (they never left). If you change your list, different white balance say, you only change the list, you are NOT shifting image pixels back and forth, not ever (lossless editing). This is good stuff.

When you output a JPG file, the actual edit is done then (shifting pixels, just this one time), and the JPG pixels contain all the list edits that you specified, it being your final version to be used elsewhere. If you want to edit it again next week, you discard that expendable JPG, and start over from your raw file and your previous list starting point (and then output a replacment JPG file).

If you delete the xmp file, the only harm is that you lose your list, and are back to only the original raw file. There are worse things, but you probably want your list.

There are ways to embed it, but the xmp file is only about a 8KB file, not much to rewrite when you change your edit.

Thanks Wayne, good explanation. So I guess I should move the xmp files to the same folder as the original RAW files for storage?

Yes, move the xmp with the NEF, they are a set. If you use the raw tools (like right click the image in Bridge, and use Move To there), it automatically moves the xmp file too. Or, you can just copy the folder, etc.

thanks a lot Wayne

Wayne, is that the same deal for Lightroom 5? I don't seem to get any xmp files but I guess it still works as lossless editing and the JPEG file is the edited image?

Yes, the same lossless edits (using the list of the edits). I use Photoshop instead of Lightroom, but both use the same Adobe Raw module (Elements too). There are ways to embed the XMP data into the NEF file, and I assume that is what Lightrooms default must be? Or maybe Lightroom uses another catalog database to store it?

My guess is there must be a preference menu to NOT embed the XMP data into the NEF? Photoshop (Bridge) does have the preference menu to keep the data separate (in the sidecard XMP files).

On editing JPG files in the Raw editor, the change list is saved in the JPG file, but the JPG file image is not affected. If you look at that JPG image in another editor, you only see the original JPG, and none of the changes. In the Raw system, you have to output the image to a new JPG that has the changes, for other programs to see it. Like Raw images that way, other programs cannot see it. Note this has substantial benefits... Changes only change the change list, and do not shift the data back and forth - which would NOT be lossless editing. And no new JPG artifacts, until the last final output.

OK many thanks. I have been saving images on the twin cards in the D7000 as JPEG on one and RAW on the other. But as I now seem to edit the RAW files only and the finished image seems to be ok I think I will only save the RAW image in camera. That will also put an end to having three copies of each image on the comp. (The two from the memory cards and the edited RAW saved as JPEG). Maybe there is/was a preference menu in Lightroom but I don't recall it. I will have to investigate later.