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The books from Adlibris in Sweden uses watermark. In the beginning there is a text saying something like "Thank you Tommy Persson for buying this book". This text is repeated once or twice in the book after a chapter.
I think this works very well. You get reminded that its is your book and you will only lend the book to people that do not distribute it. And if you borrow a book from a friend then you will not distribute it further since you see the text and you do not want to distribute your friends book against their will. So i really think that this will work as paper books with respect to how many people read each copy.
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