The issue of underwriting is definitely a problem. From what I've read, it's a bear trying to get business owners to understand the limitations of underwriting versus regular old advertising and some balk about being restricted in what they can say or offer in an underwritten spot.
Honestly, I think LPFMs ought to be allowed to be fully commercial. If a 100 or 50 kW station feels threatened by a station whose signal peters out after 2-3 miles, they need to re-evaluate what they are doing wrong in that market! Unfortunately the NAB has deep pockets and friends in high places, so I doubt the situation will ever get any better for LPFMs as far as advertising goes.
I'm very much in the minority on this website, by my views on full service type stations, LPFM or otherwise, are pretty harsh. I appreciate the community service they provide, but they don't really give someone like me any reason to listen. I'm in a small town and we have a full service community station: live local mid-morning show, swap shop, daily devotionals that must be from the 1940's, an hour of oldies each afternoon where the host just plays whatever he has lying around… it's real old school radio. But it has literally nothing for me as a local resident to latch on to. I don't buy junk so swap shop is a snore-fest; I don't have kids in school so live PBP football or basketball is useless; I'm not deeply religious so the preaching and hollering is a turn off; community calendar and stuff like that is basically available online for free on Facebook or on the city's website. After 4 pm, they go into syndicated sports and super conservative talk, which does not interest me anymore, either.
Now, I would probably listen to the Fox FM stations simply because I like a wide variety of music. In the event they play a clunker, there are 20 other stations to tune to for a few minutes, and I'd likely gravitate back to Fox eventually. That's pretty much what I do on the very rare occasions I listen to local radio here on the coast. I'll listen to Jet 100.7 until they play a crap song, then flip over to Rocket until THEY play a crap song, then check out TK 101 for five seconds, then go back to Jet…
The truth of the matter is, if I *really* want to listen to music, I'm more likely these days to listen to my own collection: it's static free and uncompressed audio that hasn't been over-processed to hell and back (looking at you, Sunny 105.7). LPFMs have an advantage here if you're in the strong signal area, because they can't afford the high dollar processing that, IMHO, wrecks the sound of most stations.
Alternatively, there's my favorite streaming service, AccuRadio. Blows Pandora and Amazon et al out of the water. So-so sound quality but commercials are comically few and far between. They have literally hundreds of "channels" with many formats that have never been played on the radio in Alabama.
So… If I don't care for community stuff, don't have kids in school so football coverage is irrelevant, and I have better sources of music when I wanna jam out… what does that leave for radio to appeal to someone like me?
As much as I love the medium of radio, and the magic of broadcasting, I have to say it's just not for me anymore. These days if I'm listening to broadcast radio, you know what I'm doing? Listening to shortwave. Seriously. Radio Prague and Radio Slovakia Intl on WRMI out of Florida are nightly appointment radio for me. It's not always entertaining but it's always unique. DXing in today's challenging environment is quite fun, but disappointing a lot, too. The magic is still there (for now). I get my fill of NPR and the "entertainment talk" type shows that were driven off the radio by Nipple-gate years ago in podcast form, at my convenience. I get my fill of local news from the local "teeveenewz" people as Dan Savage calls them.
Luckily for you folks, I'm in the minority. People by and large, especially those over 40, still embrace radio and appreciate local community focus.