I’m hard pressed to see how this isn’t a description of a resource sabotaged by its own snobbery. Completely artificial scarcity is not an effective gain for all of humanity, rather than a vanishingly tiny part of it, and now zero.
You do realise the attitude you're defending is why What.CD has completely failed to preserve culture.
While I do agree it would have been nice if they had released a torrent with all torrent files on their site, I also think they did a very good job overall.
Their users might have dispersed, but the content is still out there and the good sharing habits will stick with the ex-members. It has also caused many, many CD's to be ripped, curated and massively distributed to very high standards, for years. The curated metadata and social structure might have been lost, but the content survives.
I think they were mostly sabotaged by lack of anonimization and by their centralized architecture.
You do realise the attitude you're defending is why What.CD has completely failed to preserve culture.