They already have a 'yes' from the big labels. The big labels probably look at 3 months of no revenue from Apple streaming as a storm they can weather on the way to bigger profits from Apple Music in the long term. Smaller labels are more likely to be sensitive to temporary lapses in income.

What is their current income from Apple streaming?

Since it hasn't even launched yet, wouldn't it be $0? Thus, there are no temporary lapses in income.

Apple providing a temporarily free alternative to its paid-music store is going to shift customers to the free alternative, especially since purchased music rarely lives the iCage of devices. I can pay $15 for an album to listen to it on my device on my drive home, or I can stream it for free on my device -- why pay?

iTunes income will drop, hence the lost income.

The problem is the income with Itunes here.

If consumers buy directly from artists they love (wherever possible), that can help too. Didn't Louis C.K, Aziz Ansari etc sell their work themselves? May be this will work in music too?