We would like to do a digital optical output, however for more then 2 channels this is a major hurdle. For multichannel optical S/PDIF, compression is required, which means licensing and other issues. We are going to continue looking into this concept, however seems like a whole Kickstarter project unto itself.
One idea is to have two GPIO pins connected to buttons or a toggle switch. You can setup scripts to react to GPIO button presses to turn up and down the volume of various channels. A simple way to do that is to use the alsactl executable.
Tested on the Pi 2 and Pi 3. It is assumed that as the Pi Zero uses the same I2S silicon as the Pi 2 and Pi 3 it should work. I haven't looked into the silicon for other Pis, not sure of their status, however if they use the same audio driver then it is highly likely this hardware will work on those Pis as well.
There is quite a lot of software out there to do multichannel I/O for Linux (Raspberry Pi). For example LADSPA http://www.zthmusic.com/ladspa-plugins-for-mixing/. Things like delay, EQ, compression, reverb, etc.
There are also similar apps for jack audio.
Here is a nice list of many :
Here is a great HOWTO by Richard Taylor:
You can also use vst plugins with ALSA :
There are many DAW for audio editing, both free and commercial.
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