Niche physical releases are cool because they're intentionally obscure and for fans, by fans, and explicitly for certain subcultures or even collectors within those subcultures. I've seen floppy disk and Nintendo DS cartridge releases.
There are even more formats out there you can (re)release on:
Um, CDs are also "niche physical releases" these days. They're not quite as old-fashioned as cassettes or vinyl, but they're still generally considered "obsolete" now with streaming music services.
Not nearly niche enough for some hypebeasts, but nothing wrong with CDs in and of themselves. I think finding ways to recontextualize the experience of owning and listening are worthwhile.
I am a musician myself and I have frienda who live from touring — they told me there have been tours where they haven't sold a single CD while they sell 15 to 20 LPs on a small concert.
Killing the most ubiquitous format for free lossless digital audio and replacing it with analogue sources that degrade with each play or DRM and subscriptions purely because it’s not cool enough seems like a terrible idea. Apparently that’s where we are.