The truly great days of radio were the "Live & Local" days.
That's a bit of mythology. Historians call the 1920s and 30s, when national network radio was king: The Golden Age of Radio. In Philadelphia, almost all of the stations are live & local right now. Does it make a difference? Even iHeart has local hosts on its Philly stations. I think your criticism is fake news. Does having live & local DJs in Philly make people tune in to stations that play music they don't like? You tell me.
Regarding your second point, people have had access to music they want for 50 years. That doesn't mean they want to program it themselves. Radio gives them access to the music they want in a convenient way, plus it surrounds the music with live & local DJs. And as I said, the stations in Philly have NOT cheapened the product. The amount of money they spend has nothing to do with whether or not anyone listens.