If Apple can somehow make a competitive Pandora (less/no ads plus better skipping) it could be a huge hit with a big segment of the population. If they in the future can couple that with a subscription service it would be unbeatable.
Probably not less ads. (unless Apple can dramatically increase the ad effectiveness) Someone has to pay somehow exchange either money or time spent listening to ads.
Reportedly the problem has been with Apple wanting to allow more control over bypassing stuff publishers want stuffed into play lists ( has to do with control breadth of listening. )
I suspect Apple isn't going to be as interested in subscription as much as folks actually buying more. Subscribers who just want to play the same top 40 songs over and over again to be removed from ads/subscription path into ownership over time.
If it is just freeloaders who want to freeload on music , blow off the ads, and not buy much of anything (Music or otherwise) then they'll shut it down eventually.