Also referred to as simply watermarking, a pattern of bits inserted into a digital image, audio or video file that identifies the file's copyright information (author, rights, etc.). The name comes from the faintly visible watermarks imprinted on stationery that identify the manufacturer of the stationery. The purpose of digital watermarks is to provide copyright protection for intellectual property that's in digital format.
Unlike printed watermarks, which are intended to be somewhat visible, digital watermarks are designed to be completely invisible, or in the case of audio clips, inaudible. Moreover, the actual bits representing the watermark must be scattered throughout the file in such a way that they cannot be identified and manipulated. And finally, the digital watermark must be robust enough so that it can withstand normal changes to the file, such as reductions from lossy compression algorithms.
Satisfying all these requirements is no easy feat, but there are a number of companies offering competing technologies. All of them work by making the watermark appear as noise - that is, random data that exists in most digital files anyway. To view a watermark, you need a special program that knows how to extract the watermark data.
Watermarking is also called data embedding and information hiding.