You have a point except the portability. A single USB drive is infinitely more portable than a large cd collection.

Nothing a decent backup strategy can't mitigate. Also less portable? Between the massive storage available on digital audio players and using jellyfin with something like symphonium digital audio is massively more portable.

But... those other storage mediums can also get damaged, burn, rot, etc

Sure can. You know what else they can do? Instantly and cleanly copy their data to any other storage device, they can even do so automatically every day!