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The disadvantage of using a watermark is obvious. It introduces a distracting visual element that doesn't belong in an image. The effect of a watermark on an image ranges from mildly distracting at best, to ruinous at worst. When I see a photograph with a watermark, the watermark is almost invariably the first thing I look at. If it's large and obtrusive, it's also usually the last.
Why do people use them? I've heard two rationales: marketing and theft protection.
There are probably some photographers, such as those who do portraits and wedding pictures commercially, for whom the marketing advantages of a watermark outweigh the disadvantages. Having your name on a portrait could lead to business from those who see and admire your work. I certainly wouldn't second-guess anyone who has considered the pros and cons and made a considered business judgment that using a watermark is advisable. But I suspect that such individuals account for a fairly small proportion of the photographers who use watermarks.
What about theft protection? You can find many articles encouraging photographers to use watermarks on their images to guard against theft. With all due respect to the authors, I disagree.
I make my living as a lawyer, and I've handled a fairly large number of cases involving copyright infringement. I'm not about to give legal advice over the internet. My insurer would have a conniption fit if I did. In light of what I've observed and what I think I know about the law, though, I don't use a watermark to guard against theft.
If you don't use a watermark, an admirer may copy an image that he or she likes and print it, thereby robbing you of a potential sale. If you use a watermark, maybe they won't copy the image...but they probably won't buy a print, either. The watermark may foil the admirer, but it probably won't bring you any extra revenue.
The risk that an image will be stolen for commercial purposes, rather than copied by a cheap admirer, is relatively small. Reputable businesses are very unlikely to steal images. They don't need to, and they know they'll be in trouble if they do. Sleazy businesses and individuals sometimes steal images for commercial purposes. What are the odds that they'll swipe yours?
You may have noticed that the internet is flooded with photographs. However much we love them, your images and mine amount to raindrops falling in an ocean. I might wish that my work was so exceptional and compelling that thieves would single it out for attention. I have enough of a grip on reality to know better. It could happen. I could also get run over by a truck. I'm not going to worry about either possibility.
If someone does misappropriate your image, it's not likely to cause you a significant financial loss. The thief isn't likely to be a significant business that could pay you appropriately for your work. It's more likely to be a shoestring operation. Some copyright material of mine—words, not an image—were once plastered on a teeshirt somebody was peddling on the internet. I was mildly flattered and very irritated. The teeshirt peddler, though, probably couldn't have paid a significant judgment for copyright infringement if I had gone to the trouble and expense of getting one. I let it pass. In most cases of image theft, that will be the course of action that a dispassionate cost-benefit analysis will suggest. I'd rather create new images than fight about old ones.
Suppose the highly improbable happens: an image of yours is misappropriated by a thief who makes a lot of money from your work. If it were to happen to me, I'd probably pop some champagne, kiss my wife, and celebrate. I'd almost certainly have no trouble proving that the image was mine. The thief would get a prompt demand letter. If he or she didn't pay up, I'd like my chances in a court action. A lot.
For all of these reasons, I don't lose worry about image theft. Since I'm not worried about the problem, I'm not going to put a disfiguring watermark on all my images to reduce the already minimal risk.
Obviously, a lot of people come to a different conclusion. I don't suggest that my answer is the "right" answer. The right answer for you will be the one you reach after thinking through the pros and cons.
Don Peters' photographs can be seen here.