I'd say it's inter-related. When you say the product has deteriorated, what do you mean? We've experienced a complete generational turnover during that time, so what appealed to boomers and even GenX is no longer relevant. The music has certainly experienced a major change, when you compare pop hits 20 years ago vs. now. And the way we use media has changed. So has the product really deteriorated, or has it just changed to suit the changing audience?
As I often ask, who are all the personalities on Spotify and Pandora? If that's where the radio audience is going, maybe that's what the radio audience wants.
Why do I say the product has deteriorated? I did not say definitively it has. I said it was my opinion; whether it has is subjective. Reasons why I feel it's deteriorated include 1) Less talented jocks around the clock with the possible exception of morning drive 2) Less entertainment and information content, 3) Much less conversation about and connection to the local community, 4) Less interaction with local listeners, 5) Less creativity in promotions and contests, 6) Lesser opportunity for local listeners to win prizes. I was not referring to the music; contemporary radio plays currently-popular music as it should.
I agree that the way we use media has changed and as I alluded to in my post above, digital technology has disrupted our lives in numerous way. There are so many more ways to listen to music that some audience erosion was inevitable. A lot of new shiny objects are out there.
Your feeling that terrestrial radio changed to suit the changing audience is an insightful one. However, in my opinion (and only my opinion), the objective of the downsizing that started at the dawn of consolidation, accelerated when Lee and Bain entered the picture, and is continuing now was not to reflect the changing tastes of listeners; it was to save money. I can speak only for myself, but the thought I've had many times in recent years is, "With radio deteriorating so much, I'm going to start streaming."