Not dead yet. I know people who still do album listening sessions, but it's concentrated. E.g., friends who are nuts over Laufey's music will all listen to her latest album together. Same with the Swifties I know. At least one Swiftie I know also plays the newest albums on loop in the car for several weeks to "burn it in" when they come out. On the other hand, people finding new music through whole-album listens seems rarer. Instead, I think they first hear an isolated song on streaming and then if they like that they may dig into the album it came from or the artist's backlog in general. I think at least one said they're trying to get into whole-album listens though. If the whole album is worth listening to, that is. Some people only like one or two songs off an album.
Myself, I usually listen to music as an album, and select for music that is designed to be listened to that way, or at least labels itself an anthology/best-of when it isn't. Turns out the younger generations aren't opposed to this approach, even if it's not the dominant mode of listening. I have a bunch of Gen-Z friends and when they last held a Taylor Swift listening party, I attended and brought my studio monitors for use on the principal of supporting more engaged album-oriented listening, even if I think it's terrible music. Plus if I'm going to vocally hate on it I figure I should have listened to it at least once.
From there, on my initiative we spun things off into a monthly listening party. We randomly choose someone to pick an album (or classical piece, etc., no playlists, has to be something originally intended to be listened to as a whole), and then we meet up, listen and take notes, and discuss it after. So far we've done
Ziggy Stardust and the Spiders from Mars by David Bowie
, How to make love $stay by Marcioz double-featured with
Ultraviolet by Used Cvnt, and
Sun by Thomas Bergersen. I anticipate the person who's up next choosing either
Rumours by Fleetwood Mac or whatever the "top" ABBA album is. On the whole everyone seems to be enjoying themselves, and a number of people have found "new" music that they want to listen to again. For my turn I think I'll choose
Burnt Offerings by Iced Earth.
Edit: to the format question, the people I know who buy physical media are usually fans who are doing it for collection purposes, but one person (besides me) is doing it so that they "own" the music. I think Taylor Swift usually sells out the physical media albums pretty fast, according to my friends. Apparently she releases cardigans for each album too. Maybe you could release limited-edition fedoras with each album,
@VonBonfire.
Myself, I usually listen on youtube first until I get around to finding a copy of an album if I think it's good. E.g., I just dug up a 1995 release of
Burnt Offerings with all the cool artwork of Dante's Inferno. Need to get
In the Nightside Eclipse and a bunch of other stuff too. Someone else said something along the lines of "Pay 10$/month for streaming, or pay 10$ for a new album I like each month and build my collection." I like that idea, and try to lean more towards it myself.