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Yes you can airdrop to nearby phones:
Step 1. Launch Music App on your iPhone, then
Step 2. Tap on New beside of For You tab, and then navigate your favorite songs or Music
Step 3. Now go for More (…) icon option at right-bottom side of the iPhone screen and tap on it
Step 4. So you’ll get five option select Share Song… among them.
Step 5. Tap on Airdrop and follow the instructions.
Yes, the receiving phone has to be in close proximity to your own phone.
It won't work from NJ to Indiana unfortunately!
Let me know if you have any other questions,
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