Yes, you're correct: the net effect could be to undermine CD's. Though, as mentioned a law that few people are aware of and even fewer take any notice of will likely not have much of an impact.That's interesting.
I can see it as undermining CD's though, not sure who's logic that was to do it that way. It could be seen as a bit of a double edged sword really because why buy the CD's in the first place. If you can't rip them which maybe your preference for playing the content as time goes by, just buy the download form instead. Or of course don't buy anything and just subscribe to a service where you can have infinite choice rather than owning particular albums.
Technically people shouldn't rip CD's. But they do. UK is in limbo on this one and ought get a levy applied and let us all get on - legally - with format shifting music we have paid to own.
Currently it's not the way anyone wants it to be. The consumer (who technically cannot rip a CD) or the copyright owner (who gets no payment for all those CD's that are ripped or copied).