"Choice of equipment isn't about what the average listener can distinguish."
Project budget trumps this and will be the most important determiner of equipment choice. Shrinking profit margins for recorded music shrink project budgets. Increased logistics costs for touring decreases profit margins further. If money can be saved in the recording process by dying record labels who no longer have "Hysteria" sized recording budgets to loan out, so be it, especially if the listener can't tell the difference and doesn't really care.
Choice of equipment also important after you have recorded and you are sending to someone else to mix/master. You have to make sure your project will meet their technical requirements and fit well into their workflow.
"Audio tracks get remixed, remastered, used in commercials, movie soundtracks, transferred to differing audio formats when the tech changes in the future, etc., so the source tracks have to be the highest quality."
They don't have to be. It is preferred that they be highest quality possible. Financially, there is a diminishing return past a certain point. Higher budget projects will get higher quality source material. This is why there is always the argument about sample rate/bit depth/hard drive size trade off and whether it is worth it since things can only be downsampled, not upsampled. Enter endless debates about the Nyquist Theorem.
Everything you listed applies to higher project budgets and the way the old recording industry made money. Artists thinking about high quality, expensive originals and the expensive gear required to produce them puts the cart before the horse. Before recording a high quality original, they need to think about how they are going to recoup a profit. They will need publishing and licensing deals, legal and financial representation, membership in a group like ASCAP/BMI/SESAC, etc., before there is demand for their works to be used in commercials and soundtracks in the first place.
The vast majority of your recording done today is not going to need as high a quality original as what you are seeking, especially considering cost. We are more likely looking at streaming on YouTube and Soundcloud here, not licensing to a film. Spotify wants 320 kbps mp3. 48khz 24 bit is preferred for many streaming services and what I currently record in.
And we haven't even gotten into PCM vs. DSD.
"What the consumer gets is a separate matter." What the consumer gets is intimately tied to the entire process. If what the consumer gets is severely downgraded audio, and fewer and fewer consumers are audiophiles, the financial sacrifice for a higher quality source material makes less and less sense. We cannot easily predict what future technology will be, but it doesn't look good for audio quality. Even with increased bandwidth and hard drive sizes mp3s don't look to be replaced by WAVs anytime soon.
"Just because MP3 are compressed low-quality, doesn't mean the source tracks can be recorded at that same low quality."
Right, but it also means that if the consumer has a severely degraded end product and are happy with it, they are not going to be particularly desirous of a high quality original. Once again, a high quality original is a desired luxury, not a given. At some point, the nice gear required to make it will simply not be worth it and will no longer be produced.
"You are talking like a consumer, but you clearly aren't familiar with what goes on in studios. And yes plenty of them exist; real studios with real hardware."
GIT grad 1999-2000. Toured RIT studios there. Toured Middle Tennessee State recording arts facilities 2005. Toured Full Sail University facilities in Winter Park, FL, 2006. Music consumers are self-publishing producers now. That was formerly not the case.
Studio closures:
https://www.nme.com/news/music/near...ntly-close-without-government-support-2660033
NPR article from 2009. It was dire even then:
https://www.npr.org/2009/12/10/121304883/recording-studios-face-uncertain-future
100 room studio closing in LA 2022:
https://laist.com/news/arts-and-ent...hurdles-but-structural-issues-close-its-doors
How Covid hurt studios in 2020:
https://www.vice.com/en/article/bvgwd5/coronavirus-has-left-recording-studios-in-limbo
In short: big, expensive studios are a dying industry saved for big budget projects and famous artists. Studios have a vested interest in feeding software companies with high quality content to make up for the fewer artists who are recording in those studios.
"Software companies and home recording amateurs have nothing to do with keeping the lights on in professional recording facilities. When an act opts for software emulations or alternate methods, it's usually one of several things: 1) the tracks aren't critical to the overall final, or 2) they are pressed for time, or 3) they are being paid to use some sponsored tech and evaluate it, or 4) they are partners in the development of said technology."
1) Software companies and amateurs are replacing artists as customers for these studios. If an emulated "non-critical" track can be blended into a real hardware track in a mix and no one can tell the difference, there is a less compelling reason for that expensive original gear.
2) They may be pressed for time. The studio is going to be pressed for clients. Who runs out of money first, the artist or the studio? The studio will also cut its overhead by increasingly relying on cloud based software instead of purchasing expensive hardware units that it cannot afford.
3) All the more reason for studios to partner with software emulations, which get sold more than expensive hardware units since there are fewer studios to house those units, A good example would be NYC Avatar Studios partnering with Superior Drummer. Helps the studio promote itself and give it work by recording the samples and it gives Toontrack the prestige of a famous studio to back its flagship product. I mean, Berkelee's next door.
4) Bingo. You hit the nail on the head. With fewer studios and fewer acts able to afford real studios, real studios have to partner to develop software and technology to make up the shortfall of artists recording in their studios. This software and technology is then sold to technologists, hobbyists, home recordists, etc., the real backbone of the music industry now.
"The Judas Priest anecdote has nothing to do with the topic. Simulating sounds has been done in audio for as long as motion pictures have been made: it's called "Foley".
The Judas Priest anecdote had everything to do with the topic because it demonstrated a shortcut in production to get around a technical/financial hurdle during recording--something people are doing now with software.
The contention here is you feel the real equipment is better and thus "worth it." I agree to some extent. However, given financial pressures on the music industry, software emulations make more and more sense. Listeners are less willing to spend money on recorded music and they are less concerned about audio quality. Further, the old studio model is dying, cannot be resuscitated, and will probably not come back in the future on the scale it was before the 2000s.
The approach you're taking is like favoring a master sculpture over a 3D printer. I understand and appreciate why that would be done. But it makes less and less financial sense, and the end user isn't going to be able to tell the difference.