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That's pretty cool, but at what quality? MP3? AAC? M4A? FLAC? You don't know until you buy it and plug it in, you know that a CD is going to be WAV files which is uncompressed audio mastered at the best quality possible, which you can then rip to your desired format. If whats on the USB drive isn't FLAC, you're limited to what they gave you.
It all depends on if you're doing it yourself or if you have someone that's already setup to do it as a business. After a quick search, I found a site that will do 100 CDs with inserts and jewel cases for $255, I'm sure the price goes down with the more you order. The same site offers custom USB drives with silkscreen printing (how else are you going to know what's on it amongst all your other flash drives assuming you intend to keep it?) is $330 for 100, so if the artist is actually putting multiple CDs onto a single USB drive than it definitely is cheaper for them, but I'm not sure how many bands would actually do that.
That's one artist, lots of artists care about their music being pirated because it cuts into their revenue, which they get very little of in the first place (referring to CDs, not streaming which is a lot better for them in terms of revenue). IDK how old you are, but I'm guessing you don't remember Napster/Limewire/Kazaa. Also, a lot of the time it's the companies that own the rights to the music that care the most because they're the ones that get like 70% of the profits.
Ah, yes, the good old Sony rootkit.