According to Eliot Van Buskirk on WIRED's Listening Post blog, the MP3s that Universal Music started selling this month without DRM encumbrances will contain watermarks. The data in the watermark is per-song, unlike Apple's per-user identifying metadata. Also unlike Apple, the watermark will be embeded in the tune itself, not attached via additional data.

Wile Van Buskirk is quick to assure readers that the watermarks aren't personally identifying, the more relevant question is "so what?" It's unclear to me what Universal hopes to accomplish here. Statistical sampling of songs found on P2P networks and sharing sites might give some indication of whether more of those copies are coming from MP3 purchases or ripped CDs. But, as Eric Bangeman points out, there's a big unknown here, which is the course of propagation. If I sample 100 copies of a shared song and find that 90 of them have no watermark I can't thereby assume that 90% of shared music is coming from CDs. It's possible that all 90 of those copies were from one uploader who happened to have good bandwidth that day and so most people who asked for that song got a copy from him. Without a good chain of custody you can't say much about what a per-song watermark reveals.

Of course, simple numerical logic never dissuaded the Cartel from doing whatever it had its collective mind set on. Universal may have already decided to use this test as a way to make a case against DRM-free music and the actual numbers will be made to show whatever the pre-conclusion is. I guess we'll wait and see.