Well, there is NPR (National Public Radio) which is about 15-25% government funded, but that's typically news/talk/classical. Some of the edgier NPR stations might have an acoustic rock/folk set at midnight on a Friday...
Lots of generalising to do here to answer these questions I guess but I figure there's opportunity out there for someone who can make something of the answers.
Mergers and acquisitions. The homogenizing of radio made it such that, while it played the top-40s in each major genre, it become excruciatingly boring because they'd only play the top-40s. You'd literally hear the entire selection of music they'd play within a couple of days of light listening.
http://en.wikipedia.org/wiki/Clear_Channel_Communications
http://en.wikipedia.org/wiki/Infinity_Broadcasting_Corporati...
Here's the history of a great example:
http://en.wikipedia.org/wiki/WHFS_(historic)#Abrupt_format_s...
Top-40 music is by definition the music for the largest possible audience -- or put another way for the lowest common denominator of listener. It's boring, format stamped mediocrity that favors Nickelback over any better band.
Every so often I'll surf the stations and be amazed that songs that were playing and popular 10 years ago are still playing in regular rotation. Songs that have since moved onto regular rotation in doctor's office waiting lounges and elevators.
I remember a time when you could turn on your station of choice, listen for an hour and hear 3 or 4 songs in the top-40, 3-4 in the top-100 and 3-4 new songs as they tried to bring in new material for listeners. There also used to be just better selection in stations representing slightly different formats in the same major genre, it was possible at one time to find a station that played hard rock, classic rock and alternative rock. Now it's just "rock" and all three will play Nickelback at the same time.
Here's the current top-40 in rock http://www.billboard.com/charts/rock-songs#/charts/rock-song...
At least a fourth of these bands I remember getting airplay in the 90s. These are bands so old that the beginning of their careers are starting to see some play on the classic rock stations.
Radio killed itself.
There are exceptions, like the Pacifica network and oddities like KPIG, but they're few and far between.
If you're looking for some corroboration, you could check out documentaries about the early days of hip hop.
For me, commercials are also a large issue--with TV I have a DVR and my browser has an ad-blocker, so I'm just not used to listening to commercials. They tend to start aggravating me after a very short time (10 seconds or so).
Those are the reasons I don't listen to the radio any more.
KPIG is pretty great, but they have ads.
There are lots of college radio stations (check out KDVS and KALX) that are pretty amusing, but they're not so much "community driven" as "driven by the people who show up and pay their dues". That may seem like nitpicking to you, but it seems very relevant after an hour of frogs and Star Trek samples.
NPR stations, Pacifica stations, kind of sort of don't have ads, but they do have sponsors and pledge drives. They are pretty old-people oriented.
I'm sure someone who is slightly less NorCal centric can improve on this list.
NPR and KDHX are the only radio stations I listen to. The rest of them are literally unbearable.
edit: I used to really like XM radio a few years ago, but it was a subscription based service. And I haven't really listened to it much in a few years, so I don't know where it's at currently.
Boston College WZBC
Stanford KZSU
UC Santa Cruz KZSC
KUSF WNYU WUNH
Tons of great music. All free. All available on the net. Throw in Radioshift to record my favorite shows and I have more music than I can possibly have time to listen to.
Why does everyone always forget about college radio?
BTW, I'm using youtube to check the recommendation before getting the album.