Modern steganography studies the encoding and the detection of secret messages transmitted over digital communication platforms. Steganographic methods hide the presence of an arbitrary digital message by encoding it into other digital media, thus making its discovery by potential investigators very difficult [1]. The importance of steganography was recently reconsidered by governments with regard to Internet security ([2], ch.1, [3], pp. 41-42).

Digital watermarking, on the other hand, focuses mainly on the protection of intellectual property rights and the authentication of digital media ([4], ch. 7, [5] and [6]). Similar to steganographic methods, digital watermarking methods hide information in digital media. The difference consists in the purpose of the hidden information – it pertains to the digital medium itself and contains information about its author, its buyer, the integrity of the content, etc. Digital watermarking methods help keeping track of the quick and inexpensive distribution of digital information over the Internet. They provide new ways of ensuring the adequate protection of copyright holders in the intellectual property distribution process ([7], ch. 1). 

References:
[1] K. Curran and K. Bailey, "An Evaluation of Image Based Steganography Methods," International Journal of Digital Evidence, vol. 2, no. 2, 2003.
[2] E. Cole, Hiding in Plain Sight: Steganography and the Art of Covert Communication, 1st ed.: John Wiley & Sons, 2003.
[3] Interagency Working Group (IWG) On Cyber Security and Information Assurance (CSIA). (2006) Federal Plan for Cyber Security and Information Assurance Research and Development. URL: http://www.nitrd.gov/pubs/csia/csia_federal_plan.pdf (accessed May 9, 2009).
[4] D. Feng, W. Siu, and H. Zhang, Multimedia Information Retrieval and Management, 1st ed.: Springer, 2003.
[5] Y. Lim, C. Xu, and D. Feng, "Web based image authentication using invisible Fragile watermark," in ACM International Conference Proceeding Series, Proceedings of the Pan-Sydney area workshop on Visual information processing, vol. 11, 2001, pp. 31-34.
[6] C. Rey and J Dugelay, "A Survey of Watermarking Algorithms for Image Authentication," EURASIP Journal on Applied Signal Processing, vol. 6, pp. 613-621, 2002.
[7] C. Lu, Multimedia Security: Steganography and Digital Watermarking Techniques for Protection of Intellectual Property, 1st ed.: Idea Group Publishing, 2005.