I have factory reset the phone once and the watch twice and no luck.
I have had issues with Milk Music in the past and Samsung did get it working after a bad update, but now it appears the standalone functionality is once again broken.
I have several friends on AT&T and Milk Music works perfectly for them, so this appears to be a Verizon issue. Please fix this immediately. With Milk music being the only available streaming application, it is important that it work.
This is not a link to customer service. Call them. Also just because your lil buddies on a different networks app works does not mean it's a Verizon issue. Did you in install and reinstall the app? Did you call samsung for help? And milk is not the only streaming music app. Who told you that?