This article is from the CD-Recordable FAQ, by Andy McFadden (firstname.lastname@example.org) with numerous contributions by others.
The "Duolizer" system splits music into two pieces. The bulk of the
music is on the CD, but a small but essential piece is streamed from a
secure server over the Internet. The idea is to allow music publishers to
distribute songs to the media and retail outlets ahead of scheduled releases.
This was a response to songs appearing in MP3 form on the Internet before
the CDs went into distribution.
See http://www.bayviewsystems.com/solutions/duolizer.htm for product info.
This scheme can't be used for general CD protection, because if the music can
be played on a computer at all, it can be captured with a program like Total
Recorder (http://www.HighCriteria.com/). It will be reasonably effective
for promotional copies of songs, though, where the goal is to prevent people
from walking away with copies of the discs.
As an added bonus, because the music is streamed from a central location,
it could have a digital watermark added. If (say) somebody at a radio
station made an MP3 copy, it might be possible to trace the source of the
MP3 file back to the source. There is nothing on the product pages to
suggest that such a scheme is currently in place.