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This paper proposes an effective pseudonoise (PN) sequence and the corresponding decoding function for time-spread echo-based audio watermarking. Different from the traditional PN sequence used in time-spread echo hiding, the proposed PN sequence has two features. Firstly, the echo kernel resulting from the new PN sequence has frequency characteristics with smaller magnitudes in perceptually significant region. This leads to higher perceptual quality. Secondly, the correlation function of the new PN sequence has three times more large peaks than that of the existing PN sequence. Based on this feature, we propose a new decoding function to improve the robustness of time-spread echo-based audio watermarking. The effectiveness of the proposed PN sequence and decoding function is illustrated by theoretical analysis, simulation examples, and listening test.