I have just noticed this problem and have come across this thread. Very disappointing approach by Apple again. Apple Music and iTunes is pretty poor vs other services anyway, and this just pushed me over the edge and away from Apple - Spotify it is. I wish i would gave seen it in the Apple Music terms - i would have not have bothered with Apple Music at all (and I get it free?!)
Apparently there is an App you can use to update your Nano - Foobar2000 - as for me, i am just going to throw my Nano in the bin and move eco-systems - I am done with Apple.
Had the misfortune of buying the new macbook pro too - i am not winning lately.
Apple, what is going on? You were so good once, innovative, smart, and now, becoming so bad - same old rat race as others pc makers, taking ports away, not giving a touch screen (but a touch bar with strict developer conditions that make it virtually useless) . . . no power light when the Mac charges, and worst of all, the inability to play my purchased music on an Apple Nano - Einsteins - did it take 800 people to come up with that stroke of genius? It is what the Nano is for. As for the iPhone, this will be my last - thanks Google for the Pixel, G-Suite and unlimited photo storage. Thanks Spotify for the Music, and thanks Microsoft for picking up the innovation torch - my next will be a Surface Book and Surface Pro (bye bye iPad).
Thanks everyone for your thoughts, advice and opinions on this question - it helped me draw my own conclusion.