That might not have been helpful, but I don't think it hurt streaming as badly as you think it did. Streaming was still relatively in its infancy at the time, and few people listened to it back then. Granted, this is a small and not necessarily representative sample of the population, but I remember streaming music in 2000-01, and my friends were always confused as to why I would be listening to music on my computer instead of on the radio or the CD player when they'd come over. Not all of them commented on it, but all of them noticed it. Most snickered at me for listening to the radio like that, and none inquired about how to do it themselves or what might've been available that was so interesting to me.
I agree with you that ad inserts don't work well, but I don't think most people listen to the radio for a smooth transition between the stopsets. The bigger problem the AFTRA issue created is that the internet audience has to be sold separately, and internet spots don't sell for much. What we don't know, however, is how streaming would've evolved had the AFTRA problem not arisen. Advertisers don't want to pay to reach out of market listeners who can't buy their products, and broadcasters would still need to monetize that audience to continue streaming to it. I suspect the result eventually would've been either more geofencing of streams or that out of market listeners would hear exactly what streaming listeners hear today, which is those internet only spots that don't transition well. Most of the big operators can make money off of streaming spots, but it's a very low margin business.
I will also say that mobile streaming works very well. I occasionally will go through an area that lacks or otherwise has inferior cellular coverage, and it also depends on your wireless carrier. It does, however, work well so long as you have service. About 10 years ago, I got together with a friend in Iowa and drove from near St. Louis to Iowa City. My cellular network dropped off at a truck stop in far Northeast Missouri and didn't reliably come back until shortly after I crossed into the Iowa City city limits. It did, however, seem to do fine along the interstates in Iowa.
