[nsmartt]

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');

[hoop]

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.

[baddox]

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.