> The only problem with watermarking is the privacy angle, it can make it possible to identify what you read, listen to, and watch. As long as there is enough competition so that these records do not get centralized, and as long as you can create new online identities at will, I think that this will balance out in the long run.
I'm not sure I see this as such a small problem.
Records of how people choose to read etc don't need to be directly centralised to be a problem; far better just to share them for marketing purposes, as happens extensively in various areas at the moment. Which results in a significant privacy intrusion. I don't see how the ability to create new online identities at will makes a significant difference, as other metrics (especially payment) can presumably be used to link them, which is a very valuable thing to do for marketers.
Also, to my limited knowledge, removing watermarks, and even determining their existence, is very difficult. At least with conventional DRM you can be reasonably confident when to be wary of it.