> Watermarking doesn't prevent piracy.
But.. but, I was told that this was the objective and purpose of all DRM!
> It discourages casual sharing.
If that is the objective, then yes, it could work. For a customer who is careful with his data and hardware - watermarking is likely preferable to copy protection.
The griefing problem and false positives through theft/negligence would remain but at this point it is impossible to predict how bad it would become. Judging by how the publishing industry faithfully follows the footsteps of music moguls, I foresee The Register headlines ca 2012 - Evil Penguin Sues Tiny Tim for Trillion Yens!