When a resistor of 1 Ohm is added in series to the Current supply to the Diode laser, any change of the voltage on the resistor will appear as a change in the current to the Diode laser.
A coax cable is used to connect both sides of the resistor to the output (earphone plug) of an audio system (such as transistor radio).
In figure 1 the laser transmitter is sketched.
Figure 1: Laser Transmitter.
The output of the audio system creates a change in the voltage on the resistor. The rate of change of this voltage is proportional to the original audio signal.
These changes in voltage on the resistor, appears in the supply voltage to the Diode laser.
Since the output signal from the Diode laser is proportional to the supply voltage (see experiment for measuring I-V curve of Diode laser), a modulation of the Diode laser output is created.