It could be that FREE FM came along five years too soon. There were pioneer AM talk stations in the 60's and 70's that ultimately failed and went back to music -- KLAC 570 in LA was one example, as well as the old KWBZ in Denver -- but by 1980 it was clear that talk was the future on AM.
I think they made a mistake trying to launch a talk format at the same time they lost their number one 18-34 talker -- Stern. The FCC crackdown on shock radio made it difficult to actually do radio aimed at the demo they were targeting, 18-34 men. The indecency crackdown may have as much to do with losing a generation of listeners as the IPod did.
Even if 18-34 male talk is a non-starter due to the indecency rules, that leaves plenty of demos open for talk -- including all the female demos. What's even more amazing than the FREE FM fiasco is the industry's near-total lockout of female-oriented talk formats, and the incredible head-in-the-sand stonewalling of the Greenstone Media effort.