The thing is not to block the copying , but to arrest the initiator of the one who put it on the internet in as the first.
The watermark will help to identify the original owner/reciever of the music.
Say for instance you are working at some radio station JWXL and you get lots of promotion cd's from Sony.
They give you this nice cd and you decide that it's cool to put it on Kazaa. So you convert it to mp3/ogg/wma/whatever and everyone starts leeching it.
Now if Sony finds out , they will try to extract the watermark from the file and identify it to you. So , to say in the least , you're a suspect on distributing copyrighted material on the internet.
Perhaps you're arrested , perhaps not , but in many cases your job might be in great jeopardy and your credibility towards Sony might have gone to zero. No more promotion materials for you.
Funny thing is , they say this watermark "survives" encoding , reencoding and rerecording , no matter if it's audio or digital.
But the fun thing of mp3 for instance is that it usually removes all the sounds the human ear can't hear anyway. So if this is to be a correctly working watermark , it must be somewhere inside the audio spectrum of the normal human ear to still be inside that mp3 file.
I dunno about the algorithms for .ogg and .wma , but i'm pretty sure they don't differ that much from the Frauenhofer mp3 encoding techniques.
Perhaps it's already doomed , because if they can embed a watermark in it then people can also come up with a bit-by-bit comparison to see where the watermark may be.
At first you can be cautious. Grab a promo cd and a normal cd and start comparing these two. They should be somewhat identical except the watermark and maybe some other bytes. Then get rid of those bytes and reencode the result.
Who knows ?