Nobody is saying that things are just fine or even the same. But radio is far from dead, and vastly more people use it regularly than you indicated.
I am (obviously) skeptical of your claim that "vastly" more people use it regularly. My "research" is anecdotal, and comes from talking with the young people I've worked with since leaving radio and landing in a tech company. They're aware of it since their parents listened (and maybe still do), but it is way down their list of listening choices if on the list at all. The last bastion of radio was the automobile, but for most of them the thing in the middle of the dash is the "infotainment" and the most important feature is whether or not it has Apple Car Play or Android Auto.
As for the elephants, what is being done to address those problems? Long ad breaks haven't seemed to budge for years, and talking to the sales manager to cut some of that bloated inventory is usually a non-starter.
Yes, radio is one for many and you can't pick the playlist, but that was always true. Maybe if listeners felt they had some control over the music selection? It's a crazy idea and has never been tried (sarcasm) but if radio is going to compete it has to offer something to make up for that shortcoming. Radio used to be much more participatory. The phone lines used to light up with people making requests. Shows were peppered with callers doing "shout outs" or just being funny. Listeners had some sense of agency, and at least the illusion that their requests were influencing what was being played. Plus they got a brief moment to talk to their favorite personality. Streaming services don't offer anything like that. Most radio stations don't anymore.
As for the revenue issue, what is being done to counter that? Seems to me that it has been nothing but budget cuts. Even during a good year, there's budget cuts. Talent let go. Operations consolidated. Less and less money invested in the product. This also drives the reduction in revenue, and nobody seems to grasp that simple fact. The product has gone downhill year after year in terms of quality and a unique selling point to potential listeners due to constant budget cuts, and when the revenues shrink again (as they inevitably will), the answer will be even more cutbacks. Lather, rinse, repeat.
When it comes to solutions, you seem to be saying "just do what (insert country) is doing, automate and syndicate everything!" You mentioned Macon, Duluth, and Spokane, and there's two things you seem to miss. One, of course they don't offer top-notch radio stations anymore, because all the money that might be spent on hiring talent or investing in the product is gone due to consolidation and the need to hit the quarterly numbers of the giant corporation that owns them. The other part is that the talent that used to get their start in smaller markets isn't coming, because there's no jobs in smaller markets for the most part. Used to be a young jock could learn their craft in Duluth, move up to a job in Spokane, make the jump to Seattle and then into the majors. That "farm system" is for all intents and purposes dead, and new talent is trickling up very slowly rather than banging on every PD's door from New Bedford to New York. Why work in old fashioned radio when you can make more on Tik Tok, YouTube, or a podcast? That national, entertaining talent you want to put on every station has to come from somewhere, and it isn't going to be small or medium market radio stations.
