A number of companies have introduced digital watermarking software and services that allow webmasters and copyright owners to imbed information within graphics and audio files that can be used to identify the owner's rights to these works. The term "digital watermark" is derived from the traditional watermarks that exist in high-quality letterhead and certain currency. On letterhead, watermarks typically are not apparent to the reader, but, when held to the light, reveal the name or logo of the paper's manufacturer or the entity using the letterhead. Letterhead watermarks serve as a silent sign of quality. On certain currency, watermarks are imbedded into paper bills, ensuring the currency holder that the bill is not counterfeit.

Similarly, digital watermarks also serve the purposes of identifying quality and assuring authenticity. A graphic or audio file bearing a digital watermark can inform the viewer or listener who owns the rights to the item. Digimarc, the self-described "leader in digital watermark technology," describes the process this way: "A digital watermark is invisible to the naked eye. It hides in the naturally occurring variations throughout an image. Imbed a digital watermark in your images and you create a copyright communication device. Anyone who views your watermarked image containing your unique identifier will know who you are and how to contact you."

The computer industry has not yet agreed upon a universal standard for digital watermarks. The processes used by various companies are protected by different patents. Nevertheless, all of the various available software and services operate around the same concept. In graphic images, for example, digital watermarks alter the image to provide digital information supplied by the party who imbedded the watermark. The watermarks may be viewed with stand-alone or plug-in software and can reveal either (1) a unique identification code that can be traced to the copyright owner or (2) more complete copyright ownership information. A decision on how much information to include in a digital watermark is a function of at least three factors:

1. As SignumTech explains of its SureSign product, "There is a trade-off between the amount of fingerprint data that can be hidden within the carrier object data and the image quality for any given volume of object data." In other words, a unique identification code is small and requires less alteration of an image, while a full-blown copyright notice plus the author's address and telephone number requires greater alteration.
2. While including contact information about a copyright owner may seem like a good idea, copyright owners may move or assign their ownership interest to another party. Thus, current information that is accurate today may be obsolete in the future.
3. In an effort to gain market share for their products, some companies are offering their digital watermarking software at no charge and thus make some of their profit by charging annual fees to copyright owners for maintenance of on-line current contact information.

Digital watermarking is available for use in audio files as well as with graphic images. The Recording Industry Association of America (RIAA), according to an informative report from Webnoize on the challenges facing the music industry in an on-line world, "put out a call for proposals from watermarking technology companies to review the different options and eventually decide on a universal standard." The need is clear: RIAA says the value of illegal copies of music distributed over the Internet could reach $2 billion a year. Just as digital watermarks in images are invisible to the unaided eye, digital watermarks on sound recordings are "completely transparent to the ear," according to ARIS Technologies, which produces MusiCode.

Also pursuing on-line music piracy is Broadcast Music, Inc. (BMI), the performing rights organization that represents more than 200,000 copyright holders including songwriters, composers and music publishers. BMI recently introduced MusicBot -- "a new web robot designed to gather market information and music trends while monitoring the use of music in cyberspace." A similar service, Digimarc's MarcSpider, combs the Web in search of images imbedded with digital watermarks, providing copyright owners with information on where their images appear (with or without permission) on the Internet.

While digital watermarks and tracking technologies are receiving great praise, these tools still are in their infancy. Digital watermarks are subject to stripping, and tracking is limited to non-password protected sites.

Despite claims that digital watermarks can survive image alteration and cannot be stripped without seriously affecting image quality, a recent CyberTimes report revealed that the digital watermarks on some images "may have been weakened or [may have] disappeared by the time the images were processed for the Internet." Resizing, compressing and converting images from one file type to another may add noise to an image or diminish its watermark in such a manner that the watermark becomes unreadable. Further, even when a digital watermark remains intact, tracking services are of limited use to copyright owners in searching for illegal copies of their works on the Internet when such copies are within sites protected by passwords. Just as the robot of a search engine cannot catalog sites protected by passwords, a robot intending to find audio files and images is limited to freely available sites. When many copied images appear on the ever-increasing number of password-protected sites, the value of such tracking services is diminished.