My (limited) understanding is that the AudioLok method uses the fact that there are three error "levels" that can be recorded on a CD. Two of these are ignored by audio CD players so if there's intentional error information in these two levels they will be ignored by audio CD players, but rejected by PC CDROM drives.

Since the majority of music is listened to on audio CD players and the majority of digital music piracy is done on PC CDROMs then I don't think the recording industry will be overly concerned.