How al-Qaeda Hid Secret Documents in a Porn Video
As reported in Arstechnica on May 2, 2012, the German Magazine Zeit has revealed how German Federal Criminal police discovered 141 separate text files, containing documents detailing al-Qaeda operations and plans for future operations — including files labelled "Future Works," "Lessons Learned," and "Report on Operations" - hidden in a pornographic video carried by an Al-Qaeda operative arrested in May of 2011.
In this case the files were NOT encrypted. Instead, al-Qaeda employed an approach for concealing messages in plain sight known as steganography.
Here's how Sean Gallagher, writing in Arstechnica, describes steganography:
"Steganography (derived from the Greek for "concealed writing") is the practice of concealing a message to casual observers—the content is there in the open, and often unencrypted... [I]n its most common modern digital form, steganography conceals plain text or whole files within an image, audio, or video file. The approach has been a favored way to pass messages through public discussion sites and bulletin boards, and was used by Anna Chapman and her bumbling ring of Russian spies to pass messages online... In its simplest form, digital steganography can be accomplished (albeit poorly) just by opening up a JPEG file in a text editor and appending the text at the end of the content. The image will still render correctly in an image viewer or web browser, though the file will be larger—and the "hidden" content would quickly become obvious upon analysis. Most steganography is done more subtly, using software tools that tweak the bits of the media file the message is concealed in."
If you are interested in more complex forms of steganography, here is a link to an article by Gary Kessler.