Watermark data is encoded in a digitized signal by forming a noise threshold spectrum which represents a maximum amount of imperceptible noise, spread-spectrum chipping the noise threshold spectrum with a relatively endless stream of pseudo-random bits to form a basis signal, dividing the basis signal into segments, and filtering the segments to smooth segment boundaries. The data encoded in the watermark signal is precoded to make the watermark data inversion robust and is convolutional encoded to further increase the likelihood that the watermark data will subsequently be retrievable notwithstanding lossy processing of the watermarked signal. Watermark data is encoded in a basis signal by division of the basis signal into segments and inverting the basis signal in segments corresponding to watermark data bits with a first logical value and not inverting the basis signal in segment corresponding to watermark data bits with a different logical value. The basis signal is smoothed at segment boundaries to eliminate any such discontinuities. Good results are achieved when scaling the basis signal by a cube-root of the positive half of a sine function which is aligned with segment boundaries such that the cube-root sine function tapers to zero at segment boundaries.