Briefly : Watermarks do offer some protection with very limited risk or disadvantage.
If you wish only facts, I can tell of my own experience.
My first point is that, for many reasons including some that I will
not elaborate because you might consider them opinions, I just do not
buy books with DRM. I have more DRM-free good book than time to read
them. I know other people who do the same.
One reason that it is definitely a fact is that DRM are often a way
for the vendor to keep control over the book, and, for example, it may
allow him to erase the book from my library at any time. See for
example the infamous 1994 book deletion by Amazon. Less
conspicuously, it may allow the vendor to spy on my reading
This control may also imply that accessibility to my own books may be
contingent on the vendor staying in business, and there is no knowing
at this time how the ebook market will evolve.
Snooping on customers and profiling them is a major (marketable)
resource for large corporations such as Amazon and other big
publishers/retailers. This may motivate DRM, beyond authors
protection (see further remarks on author protection), since DRM forces
the user to regularly connect his reading device. Howver it is of
nearly no utility to authors. But the digital infrastructure needed to
manage indefinitely the DRM for every copy sold is very costly for an
author on his own, or for a small publisher (I discussed it with one
small publisher / retailer) though it is much more manageable for larger
The reason usually invoked for DRM is the protection of authors'
copyrights. When I started using ebooks, I knew much about digital
copyright (I have been working and even publishing about it), but very little
of the actual ebook market for a private customer, for such things as
prices (list prices and actual prices), available formats, types of
DRM used, existing retailers, sales organization, etc.
So I tried to see how I could get digital versions of books I already
owned, so as to focus on the type of books I was interested in. I
discovered that most of these books (mainly SFF classics) were either
in the public domain or sold with DRM. But before I found that, I
discovered very quickly several sites that were making them available
for free. Not legally of course. The conclusion is that DRM do not
afford really strong protection. They merely discourage people who
will not try hard to break them.
Now, a cheap way to get weak protection to discourage illegal copying
is to use watermarking, i.e. information inserted in the book to
identify the original buyer, so that he will hesitate to incriminate
himself by duplicating the book for the benefit of others. This
require no cosly infrastructure on the vendor site (just a file
associating customer and watermark, much simpler than controling every
use of the book for DRM), no snooping of readers, and no intrusive
constraints on the use of the book.
Watermarking is actually used by some publishers such as O’Reilly (who
can be expected to be proficient on digital matters), and
some distributors such as bookfunnel.
And there are also publishers who do not use any form of
copyright protection, such as Tor, Wildsidepress, Smashwords, Phoenix
AFAIK, there is no objective public evaluation of the effect of DRM or
Watermarks on ebooks sales, and my owletionn experience is that decision
making on DRM is largely ideological.