Topic summary
Dolby Noise Reduction

Extracted from the Wikipedia article Dolby noise-reduction system.
Companding
Dolby noise reduction offers a solution to the problem of hiss by dynamically changing the volume of the recording. As low-volume passages need to be boosted to cover the sound of the hiss, while high-volume sections cannot be boosted too much, the underlying concept of Dolby noise reduction is to dynamically adjust the volume based on the current volume of the recording. Low-volume sections are boosted, and high-volume sections are not. The result is a "compressed" recording which is more even in volume than the original, boosting low-volume sections to cover up the sound of hiss. This general concept is known as dynamic pre-emphasis. On playback, the volume range is moved back towards the original, a process known as de-emphasis. The concept of using pre-emphasis and then de-emphasis is known as companding.