The reason why crystal radios are better at audio fidelity is because they are the most simple form of a radio detector w/o any intermediate frequency circuits that usually cut off the audio bandwidth a bit.
More selectivity in an AM radio is a double edge sword because while allowing powerful local stations not to splatter on to others near them there is reduced reception bandwidth in the audio product.
The first time you hear AM radio through such a basic detector as a crystal set from a quality broadcast it's nothing short of amazing in the respect that the audio sounds just as good as the source at the station before it's broadcasted (besides the fact it's in mono).
I noticed this early on with AM radio as I run a local pirate station on AM. On almost all newer AM radios the audio sounds squashed like someone ran it through a telephone first. When listening to my RF modulation through a simple diode detector into an amplifier (same as a crystal set) I was blown away at how the audio didn't sound like it was going through a radio broadcast at all. It sounded just like its source.
The problem with most modern AM radio receivers is that they purposely restrict the audio bandwidth to suit the more modern talk radio format instead of music.
Not only that but the many stages of circuitry causes the tuner to produce limited audio range.
However older radios I find usually don't have this issue. I have had a few old tube sets in the past that reproduced audio really well usually with limited selectivity in tuning.
FM radios don't suffer this problem usually because of the modulation method and usually companies produce the FM radio with music reproduction in mind.
There is technically NO reason that AM can't sound just as good as FM. In fact AM can sound BETTER than FM in theory because of lack of frequency deviation distortion.
The problem is in the radio stations over compression, the radios multiple stages of detection, the high frequency roll off used at the station to improve talk (edit: I mean high frequency roll of at the radios end, and high frequency increase at the station) and to suit the NRSC specifications, and so many other things.
It is really interesting to listen to AM stations through a very basic crystal set that is amplified into a hifi system. Really shows the listener the stations true colors or lack thereof
