You have already selected your answer, but I would like to put a few more lines.
First of all, objecting to Marcus, I think that your first assumption is correct! We can store one hour of almost CD quality (14-16-bits, 44100Hz, stereo) analog audio into these commercial music casettes; i.e magnetic reels. So on a very rough basis you have almost a 600 MB (Mega Bytes) of data capacity there.
Of course, magnetic mediums have different types and different qualities.
For example, IBM has developed the hard disc drive technology (very high density digital storage) based on magnetic recording too. Their circular shaped magnetic plates make it possible for random access with the help of a moving read-write head mechanism. Packing together a dozen of such magnetic disks and very sensitively controlling the head mechanism in between the plates, provided one of the most important and successful inventions of the computer industry. Even today HDD dominates, and SSD is still expensive, or Cloud is very unconvenient.
But, you have to be careful about the medium's physical characteristics and which way you want to store data. The commercial audio casette system (magnetic casette and recording-reading circuitry together) had a bandwidth $B$ of about 20 kHz. And I guess it's SNR is about 60 dB. This is an underestimation, if you consider what I've said at the beginning; CD-quality audio. Now to be honest, Casettes cannot provide CD-quality, as there is some characteristic high frequency hiss noise in those commercial casettes. Therefore I will take 60 dB as an estimate. Also note that this SNR depends on the frequency, but I will ignore it too.
The (Shannon) capacity $C$ (in bits per second) of the medium is therefore: $$ 60 = SNR_{dB} = 10 \text{log}_{10}( snr ) \implies snr = 10^6 $$ $$ C = B \times \text{log}_2( snr +1) = 20 k \times 19.9 \approx 400 kbps $$
And assuming a two channel stereo recording this yields about $800 kbps$ channel capacity. Indeed, considering that CD had a much better SNR about 96dB, it has a channel capcity of $1.411$ Mbps. Then the commercial audio casette had an equivalent data rate about half of the CD medium. In one hour this makes about $360$ MB (Mega Bytes) of data.
The capcity is there, but how would ou utilize it?
The audio CD, for example, uses a very small tiny pattern on the circular track lines. The bits are placed as very short and very thin reflective vs nonrelective sections along the track lines that spiral from the innermost circle to the outermost, just like in Vinyl. There is no noise, but distortion due optical releftion, diffraction, and refraction, mechanical disturbances, which limits the resolution at which you can place or read those tiny dots on the circular tracks.
But magnetic medium is totally different. You store an electric signal (a magnettic one) into it. And you have noise. But you have an advamtage over the CD. The cd medium has only one amplitude level indicated by a reflection or no relection. THis is due to the specific mechanism used to write and read the bits. But the magnetic medium can provide multiple bits per symbol to be written, as multiple amplitude levels are supported.
This kind of M-ary encoding is very well utilized in Satellite communication, where 256-QAM is used take advantage of (relativlely) low noise transmission channel...
Coming to your Kansas City Standards, it's not about the magnetic medium capacity, but about the commercial phone line allowed channel capacity which was quite limited to about 3600 Hz back then...
So the conclusion is if you can afford a suitable encoding technique, in principle you an store about 360 MB of data into a standard commercial magnettice type cassette. THere are low noise (high SNR) casette types (such as Cr or Metal) available which would increase the capacity. Or at least you can roll a longer reel to increase it.