Two parts.
1) The audience evolved and radio didn't. The listeners were disenfranchised with even heritage radio stations long before the vocal minority spoke up about a format flip. And when you listen to most radio stations, even the few that are "proud to be live and local," as if that mattered, most radio is BAD. People can blame faceless corporate entities all they want (and plenty of blame does go to them, yes), but the content that comes out of the speakers is usually awful, boring, and totally not worth engaging in. Meanwhile, you have everything you could ever want on your phone, computer, iPad, etc, so your choices are limitless. You can go find the content YOU want, not what you're forced to listen to because the choices are limited. Radio stations still think they only compete with other radio stations, and so long as they continue to do that, the world will pass them by. As I eluded to before, there is a lot of blame on the corporate culture: one-dimensional product focus with no diversification, meaning a focus on the air product only, with everything else (web, apps, SMS, streaming, content creation) as an afterthought. Plus, no farm system for creating/identifying/cultivating talent, and focus on short-term gains versus long term growth. That last one won't get fixed any time soon, as it's not in the owners', er, bankers' best interests to do anything but cut costs until they can bail out in their golden parachutes prior to the plane crash and sell it to someone else. But welcome to the corporate culture of all business now...you see this in a LOT of industries. But I digress...all that said, I still believe there are things one can do at a local level to improve stations, but that people are either too lazy to do, or have been in radio too long to know HOW to do because it's so different than what they've done for the past 30 years.
2) Methodology has changed. PPM has had a big impact on some formats. Q101 is a good example of a station that was never going to be bigger than a 2-share, and one can only chase after so much beer and strip club money. M18-34 stations have taken a big hit because they're a fickle audience who is typically tech-savvy (meaning they are more adept to finding content they want from more sources), and they're not a particularly attractive demo to most advertisers.