Watermark-based copy management method and system for digital copy protection are disclosed. The system includes a copy control information analyzer analyzing a first copy control information included in an original watermark embedded into an original media data set, the first copy control information being set to one of "copy freely", "copy for display only", "copy one generation", "copy never", and "no more copies"; a playing element playing the original media data set only if the first copy control information is set to "copy one generation"; a watermark generator embedding a player watermark into the played data set, the player watermark including a second copy control information set to "no more copies"; and a recording device recoding the player watermark-embedded media data set. One of the primary goals of the present invention is to reliably embed copy control information into the played media signal by a copyright owner of the media and by a playing device using a watermark technology.