how?

I have no idea if this guy is serious, (EDIT: I submitted this before I saw his response) but it's entirely possible to embed data in JPEG files via base64 + modifying exif data. It isn't really viable for large files, however, unless vastly distributed. Perl:

  use Image::img;

  my $img = new Image::img;

  $img->ExtractInfo('image.jpg');
  #$img->SetNewValue("UserComment", $yourdata);
  #$img->SetNewValue("Comment", $yourdata);
  $img->WriteInfo('image.jpg');

You don't need to use exif data. Many tools use the often ignored alpha channel of each pixel. In this case, you have X x Y bytes of available storage where X and Y are the width and height of the image.

For lossless images, you could also use the least significant bit of each color channel of each pixel to represent your binary payload. I doubt this would be noticeable, especially with a photograph.

You could tar up your backup files.

Download a bunch of porn, maybe of Debbie Reynolds, America's sweetheart.

Use tools like these: http://www.jjtc.com/Security/stegtools.htm to distribute your backup files throughout the porn.

Visit a porn uploading site and upload your files.

Wait for others to download, torrent, repost them.

....

Hey I lost a file? Well, let's just google Debbie Reynolds topless. Woohoo! There's my quicken files!

See this article in the wiki suggesting spammers, terrorists, the fbi do just that.

http://en.wikipedia.org/wiki/Steganography#Alleged_use_by_te...

"Lately, al-Qaeda operatives have been sending hundreds of encrypted messages that have been hidden in files on digital photographs on the auction site eBay.com

I wish I had a patent on this idea from way back when, if so, I could have sued Al Qaeda out of existence.