An encoding method and encoder is provided for transparent lossless audio watermarking by quantizing an original PCM audio signal twice, each quantization quantizing to a quantization grid. As a PCM signal is inherently already quantized, there are three quantization grids to consider, the first being the quantization grid of the original PCM signal, the second being that of the watermarked signal and the third being that of an intermediate signal. The technique reduces the amount of introduced quantization error, spectrally shapes the error and fully decorrelates signal alterations from the original audio, thus making the error more similar to additive noise. A decoding method and decoder is also provided, as is a method of altering the watermark without fully decoding the encoded signal.