Although we don't produce CDs or DVDs ourselves, we have worked with many authors who have successfully incorporated a CD or DVD giveaway into their book. The most common and successful procedure for doing it is outlined below:
1. Find a company to produce/duplicate the CD/DVD for you. They will either ship them all to you, or allow you to drop-ship them one at a time to your readers. Either choice will work, and the drop-shipping option may be more convenient for you.
2. Include a page in your book (and a big graphic on the cover) that informs the reader that a free CD/DVD is included with their book. And then on the interior page, provide instructions on how to obtain the CD/DVD. For instance, you can tell readers to go to a web site and enter their mailing address and you will send the CD/DVD to them (or drop-ship it to them from the CD/DVD company). Some authors choose to collect a small fee for shipping. The choice is yours.
3. Not only does this allow you to promote a free CD/DVD from the cover of your book while not conflicting with the digital on-demand printing and distribution process, but it creates a method for you to start to compile a mailing list of your readers -- invaluable for your future marketing efforts.