Paul, you say "The Album Channel appeals to a relatively small audience".
Where do you get that information from? The massive response, from the main service core audience to fund raising for Ross Revenge/Radio Caroline suggests otherwise.
Anyway, it's a complete non starter due to licensing restrictions. Also, from a business point of view, there are multiple competitors to a 'flashback' audience but none to an album service.
Boom radio has cornered that audience.
Although I am a 'child of the 60s', I, and many, many, others do not want to hear 60s music until we die! Hearing a huge variety of album music both old and new, feeds an appetite for a wide variety of musical styles.
648 for the album service - take your pick from dozens of 'flashback' stations if you don't want to move on from the 60s.