It's called a "cut-out". They also used to do the same with vinyl LP's. It's a way that record companies discount overstocked CD's. By intentionally "damaging" the product, it becomes a factory second, and can therefore be discounted. The CD or LP is, of course, perfect; it's just the packaging that's "damaged".
That the basics, as I understand it. Perhaps others know more details.
That the basics, as I understand it. Perhaps others know more details.