Presuming though, most in the industry are a) not boneheads and b) fairly informed as to 'loudness, so what would be driving it?
Why do you presume that most 25-yr-olds thrust into executive decision positions with piles of money and cocaine crossing their desks, along with their hair-band headbanger clients who only want to get laid more often than Mick Jagger are not going to make boneheded decisions?
Myth, mostly. combined with a "rush to where the lightning last struck" mentality.
The Myth part of it is the actual belief that louder is indeed better because it gets more people to listen. This goes back to old compression practices from AM radio to get more broadcast distance wthout illegally overmodulating the signal. That was a legitimate engineering technique; it actually did legally increase a radio station's broadcast range. It no longer has any validation.
The mettality is that it's easier to just replicate a formula that worked once than to actually try to be creative or try to actually give the public something they want. Exactly the way that "Who wants To Be A Millionaire" burned out from over exposure, yet we still have executives and directors going to that well and chrning out crap like "Who's Smarter Than A 5th Grader".
And a combination of the two, we hear it here all the time: "you gotta be loudt to compete." Bullshit. Anybody with half a brain knows that in any competition the best way to win is not to attack the competition at their strength, not to play their game. Rather the way to win is to hit the competition where they're the weakest and to play the game your way. If Joe Bonehead wants to pump out something with a -5dBFS RMS, let him. let his public take his stuff out of rotation early because their ears will fatigue on it. In the meantime your rich, textured, actually interesting and non-tiring to listen to mix, which may not sound quite a loud, will still be an enjoyable listen several weeks after that.
You want exposure to more people? Don't try doing it by volume, because we're not on AM radio any more, and you can only get so loud compared to your competition. Instead, reach more people by actually being more listenable, and by staying on people's playlists longer.
And finally, remember mixit, everying in the entertainment business is fashon. The Volume Wars are not the latest high-tech discovery that advances the technology and quality of music production, and from which we will never return. Moving from dynamics to pancakes is not the equivalent of moving from mono to stereo or from vinyl to optical disc. It is only fashon choice based upon a fad use of new technology. The 70s had over-the-top super-production that accompanied the wide availability of high track count multitrack recording. The 80s found synth rock as synth technology matured past the oscillators and patch cords stage into more integrated and more traditionally fucnctioning (if not sounding) musical instruemnts. The 90s found DAW technology and the extensive use of signal processing, especially in the form of high-compression.
The Volume Wars are the polyester leisure suit of current engineering fashon. They will go out of stayle evenutially. It's just that it won't be too fast for most of us.
G.