> Only this questionnaire also contained encoded passwords for Internet dialup. I used spacing between words to encode bits - one space was '0' and two spaces were '1'.
> One can also simply replace words with synonyms at certain points in the text to encode the buyer ID, for example. It'll be easy to find, though.
> For music you can use the least significant bits of the signal (in FLAC) or small frequency shifts (survives MP3).
These are all trivial schemes which are easily identified and removed or randomized, given a few versions of the file with different watermarks for comparison. The "replace words with synonyms" scheme has the additional disadvantage of mangling the text presented to the reader, with isn't going to make readers _or_ authors very happy.
>> Moreover, any watermark which doesn't noticeably degrade the quality of the files can be eliminated through compression.
> Not really. It's easy to create a watermark that survives more encoding roundtrips than you'd care to use without noticeable degradation of quality.
That's only possible because the compression isn't anywhere close to optimal. Optimal compression would only spend as many bits as are required to represent the data to the viewer/listener. Changing any of those bits would result in a noticeable difference, by definition.