What they meant was taking arbitrary data and turning it into a valid video file that plays back. For instance, you could read each bit off as audio (zero, one, zero, zero...). The quest is to find the most efficient, yet resilient way to do so.
They said they would like to have some encoding technique (completely new) which would get transcoded without any data loss. So, my point was that such _new_ encoding techniques will be rejected by YT in the first step itself, before even transcoding.
No, they mean new encoding within the video and audio. A watermark is encoded in video, even though it's just visual data. Encoding can mean different things at different levels.
