This is amazing. I used music to connect with my grandfather when he was in the final stages of life. My grandmother had dementia and passed away a few years before and I wish I had thought of this to do with her. The only missing element was that my grandfather had to have someone with technical capabilities to be there to play the music. A device like this is game changing. Many contributors have great probing questions that will drive innovation, but personally just wanted to commend you for your thoughtfulness. Life is so much sweeter with music, the memories, feelings of joy and stages of our lives can often times be attributed to music and specific genres. Keep iterating, innovating and above all else, keep in mind the benefits of simplicity!
One element you touched on, which is a great step, is how to monetize and create recurring revenue. Having an iOS and Android app that works without the device is a great way to utilize the subscription model and automates the process for many people who would support this as a long term benefit for a family member. Consider how to make this app robust enough that a user or intermediate user would want to continue paying for it on behalf of a loved one. Can you provide badges, metrics, insight, notifications that go out to the user to show them how often their loved one uses it, what songs they like the most or consecutive hours of playtime?