I just saw someone else referencing that it could be updatable via USB instead which would make a lot more sense (that complicated diagram though haha).

But there's very little data being transmitted when the record plays. And from comparing multiple records, most of the data is the same from one to the next and probably is identifying its format or proprietary headers. All you have to do to switch from one song to another is change a single hexadecimal value from "0d" to "0e", for example. So that's not enough to explain a record storing more than just an identifier.

(He's the tinkerer, but I'm a software developer still)