Totally agree, but there was another factor involved in the switch to FM, one I don't hear discussed a lot. Top-40, as a format, was becoming closely controlled by record companies. It was a homogeneous product, top-40 stations across the country playing the same songs. But the problem was - it was censored. Although the black artists were finally being heard, there was a real revolution going on. The youth counter-culture movement, anti-Vietnam war, Monterrey and other music festivals, the free love movement, the beginning of disillusionment with the system. AM top-40 was too slow to adapt musically to the new musical trends. Kids buying albums were discovering non-radio tracks that had messages too controversial for top-40, but that resonated with the way they felt. And artists responded with even more. I remember going to friends houses to hear what they had discovered on albums - and weren't being played on the radio. I had a very progressive teacher at school that allowed me to do a presentation of revolutionary music in the English class. Every kid in there heard songs banned on the local AM top-40 like "Ohio" by CSNY, "For What Its Worth" by Buffalo Springfield, etc. I won another 30 converts to album rock that day! FM began to host "underground" music, album music, full album plays at midnight. The music was creative, revolutionary, controversial, and grew rapidly in mass appeal. What were underground rock stations all of the sudden began to generate real ratings and income. As they became more profitable - low power levels and bad dial positions were the first problems to be rectified. I would point to McLendon in Dallas as an example. KLIF was the big top-40 station with no real competition except where its signal got weak in Ft. Worth. Gordon McLendon sowed the seeds of the destruction of KLIF 1190 himself by changing low power KNUS 98.7 to underground / progressive rock. He may have been a genius who saw the future. Within five years, listenership had shifted from KLIF-AM to KNUS, and by 1975, the transition of top-40 from KLIF 1190 to KNUS was virtually complete. KZEW FM took the mantle of underground / progressive rock. Most of the "classic rock" stations of today play - or played - songs from that progressive rock era.
Add C-Quam stereo to the mix in the late 70's, it was already too late for some stations like KLIF. If top-40 AM had branched out when it had the chance in the late 60's and early 70's, perhaps the addition of C-Quam would have preserved AM music. But I don't think it would have preserved the music industry approved playlists of top-40 stations. That era ended when kids discovered album rock, and FM had nothing to lose by catering to it. I think even C-Quam was too little, too late. The musical genie was out of the bottle, and kids demanded more from AM radio than it was providing. Leonard Kahn's antics and talk radio were just the nails in the coffin of something that had already died.