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Please keep in mind that I have no idea what I’m doing with image editing.

I have a watermark that I want to add to images, but it loses it’s transparency when I try to stick it on a picture. I’ve tried the watermark as RGB and as greyscale. I read through the GIMP discussion site and found an answers that gave three possible methods (here), but I still couldn’t get it to work. (I didn’t understand the “Channels dialog” part of the second and third methods, and for the first method, I couldn't get the floating selection anchored in the mask.)

This can't be a hard thing to do — I feel like there’s something very basic that I’m just missing.

Below are the images that I'm using.

The image that I want to watermark:
The image I want to watermark

The watermark with transparent background:
Watermark

Same as above, with transparency pattern added for visibility:
The watermark

Result:
Result

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It seems that your sushidragon overlay image does not actually have a transparent background, but a white shape. Looking at the image in a browser on a non-white background shows this quite obviously. You need to remove that white shape such that only transparency is left. You can find numerous tutorial on how to remove a white background in GIMP, this is one example. –  Bart Arondson Jan 29 at 18:44
    
The watermark is intended to have that little winged shape. Here's an example where the watermark is functioning properly: link. My problem is that the watermark is too opaque. –  user19299 Jan 30 at 23:24
    
Have you tried using a different blending mode for the watermark layer? Or you could change the opacity of the watermark layer. Other than that I think the transparency of the watermark got lost in some conversion you've done on the watermark. I don't know, maybe someone more knowledgeable has an answer. –  Bart Arondson Jan 31 at 0:43
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1 Answer

As the original poster pointed out in the comments, this can happen if the image has indexed colours, and transparency is not one of the indexed colour values.

You can easily tell if your image is indexed, as the titlebar of gimp will contain indexed somewhere past the filename, Also, if your image is indexed, a marker will appear next to the Indexed... menu item in the Image > Mode menu.

To convert your image to the RGB colourspace, in the menus, choose Image > Mode > RGB.

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