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Social DRM would prevent widescale sharing because few people would know how to remove it;
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With all due respect, I don't see how that stops widescale sharing: people would just email it anyway, metadata notwithstanding, to people whom they consider their associates. The associates would enjoy their free book, not even bothering with the watermark, and would forward it to their associates, who wouldn't even pay attention to some footer claiming that Elfmark bought a book on such and such a date.
The question is not what Baen's customers could do: I'm sure that they could make an ebook sing "Yankee Doodle Dandy". The question is how popular and how sought after are Baen's titles ( and consequently how likely they are to be forwarded by a non-tech crowd). Baen's titles are for the most part just not as popular and mainstream as the stuff on the bestseller's lists.
Imagine these scenarios:
" Did you read the latest Malcolm Gladwell book? No? Let me flip it to you , then we can talk about it".
"Girl, did you read about what the heroine in Oprah Book Club's latest did to her guy in chapter four. I didn't know that stuff was even LEGAL. Here, read it for yourself. I'm going to email it to every one in the club so that we can talk about it".
To: My horror fiction email list serv.
The latest Stephen King bestseller. Here ya go".
Note I haven't even mentioned Facebook, Myspace, or discussion forums, where sharing stuff is a way of life. Frankly, I don't see some watermark in a footer even slowing such sharing down.
As Mike Shiatzskin said, these things take on a momentum of their own. Why would I even want to buy an ebook, if it was in my friends library and he could send me a perfect copy of the book, while keeping the original? You would of course say that wouldn't be "reasonable" and implore me to be a good citizen and buy the ebook.
HOwever, a whole generation of young folks have grown up applying just that unreasonable attitude to music file-sharing. Why wouldn't they apply it to ebooks?