Music publishers are making the transfer from DRM to digital watermarking of music. While DRM definitely had no supporters due to enforced limitations on fair use, watermarking is at the crossroads of what can be an immense opportunity for publishers to create an open model for revenue or a privacy nightmare for users.
The commentary at Wired talks elaborately on the merits and demerits of watermarking music. The article states the point well that even if the music groups don't use the option of tracking the source of the files presently, there's nothing stopping them from implementing it in the future. At the same time, Activated Content, the company that professes the immense potential of using watermarks to target ads (Ars Technica) at users, can provide an alternate revenue model while maintaining user privacy at the same time.
Music groups are advocating the use of watermarks for tracking what type of music makes it to P2P networks and say that watermarks won't affect the quality of music though they are inserted into the tracks. This article by George Ou at ZDNet challenges the claim of no impact on the quality of tracks and also questions the motive of companies in using watermarks, since tracking can already be implemented by following the hash of the music file.
It's indeed a crossroad for watermarking. On one side is the concern that it will let music groups track the whole process of music flow (a privacy nightmare), and on the other is the potential of using it to create a disrupting revenue model which could be a win-win situation for all. Can music groups rise to the occasion and charter a course for the optimal use of watermarking?