@Rob why can this not be cross platform? I have plenty Android games on my phone that allow music to continue playing so clearly this is not an Android issue.
Noted Rob, thanks! It works great on my iOS device now. 
Agree, it would be great if Android can have this too.
@SGS: Have you tried submitting a feature request to Corona yet?
How is this handled for Android?
And I have now tested this on iOS with adding
audio.setSessionProperty(audio.MixMode, audio.AmbientMixMode)
to the start of the main.lua
First it works fine, but when an ad is loaded and shown the background music (like a podcast for example) is turned off until the ad has finished, then the podcast continues BUT all the sounds inside the app are still silenced and audio.play is no longer working. What can I do to make this work also? Call audio.setSessionProperty(audio.MixMode, audio.AmbientMixMode) again maybe after the ad is finished?