EDIT: I know the economics for AM stations, especially in small markets, are tough, but I think AM stations could fill a need for real local programming.
For example, in my small community, there are lots of talented musicians of all stripes: rock, folk, bluegrass, jazz, classical, gospel, ethnic, etc. Not big league talent, but good enough that people turn out to catch them live. I'm sure they would play for free, just for the exposure. Why not? We have colleges in the area that are full of smart, interesting people who would be happy to talk for free. Why not?
My local AM station's building was erected in the 1950s. The current owner, son of the founder, took me through one day and pointed out that what is now 4 separate rooms was originally one big room specifically designed as a live performance studio.
There is very little truly local programming on radio today.