Here's a message I wrote on TeleRead about your DRM scheme, CommanderROR... I decided to post it here, too, since we're talking about the same thing ;-)
Roland:
I'm not convinced that personal watermark-style DRM is a good idea. For one thing, there are a number of technical issues with implementation, as in any DRM scheme. Ed Felten talks about that on his Freedom to Tinker blog (
http://www.freedom-to-tinker.com/?p=981).
However, even if it works, I question whether we want it to work. One of the problems with DRM is that it prevents legitimate fair use of content. If DRM prevents the owner from doing something legal with the content that they would otherwise be able to do with a print book, it is a failure, in my opinion. (Not to get sidetracked, but I really believe that limiting digital books to be exactly as bad as print books is a terrible rejection of their promise).
So, with a watermarked piece of content, the owner will not share it on P2P networks. But she will also not share it with friends, family, or neighbors - she might trust them, but if they share it with someone else, or accidentally leave it in the wrong folder, or any number of other scenarios take place, the content with her personal information is all over the Internet. Leaving her wide open to accusations of criminal activity, not to mention exposure of private details.
There's also excerpting - if a content owner wants to put a snippet of the work in an article or a paper. She is then not only publishing the quoted information, but also potentially her home address, account details, or whatever other personal information the watermark contains. This not only makes it impossible to write anonymous works that quote watermarked material, it would make any author think twice about publishing works that contain quoted material freely.
Another objection is touched upon by Kathryn Cramer on her blog (
http://www.kathryncramer.com/kathryn...arking_as.html), and points out that watermarking could potentially harm small content creators (as many DRM schemes do).
There are good features to watermarking, certainly, but I don't think it's the perfect solution by any means.