That is very true and a reason why an individual listening to music alone should bias towards a personal audio source to internal his sound externality. That is because there is virtually no additional benefit to the individual to play music loudly than to play it in headphones when it is just for his benefit.

But you are ignoring that a substantial percentage (if not majority) of music enjoyment situations are simultaneously social situations. Personal audio sources are objectively sub-optimal in that situation. Thus, there is a cost to those enjoying the music of using a personal audio source. Silent discos result in a total inability to talk to one another. If you are playing ambient music as you have conversations, then a personal audio source simply doesn't work.

> Silent discos result in a total inability to talk to one another.

This largely depends on the headphones used. I can listen to ambient music on my bone conduction headphones while holding a conversation just fine. I might have to lower the volume to hear people around me well, but at least I can lower the volume.

I’m surprised that after all this time there isn’t really a standard for synchronizing music playback between a large number of nearby smartphones.