Personally, if I must listen to music through streaming, I don't have much of a need for the Youtube Music variant, so my opinion below stems from that.

Now, I think Peertube could retrofit that and benefit from it. I've seen discussions that it doesn't improve as much as other ActivityPub platforms because videos are so big few end up making instances of them. But as musics are so much smaller, uploading them could give Peertube a boost in interest.

And instance-wise, there could be instances focused solely on musics, or akin to Bluesky and Piefed, that offer lists that group channels/profiles/etc. based on common subjects.

Also I know other instances can display Peertube contents, so maybe playlists that propagate through ActivityPub could be made too to work as some sort of radio?