I am new at this so am trying to catch up.

Hello. Correct, CRC error means it can't read the original at a certain spot. If Shrink has to compress data at a lower rate, than it needs less of the original information to make a good picture, so it can afford to skip the CRC error spot. Video compression is "lossy" and you can afford to choose just how much you want to lose, which reflects the end picture quality. Hope this helps