The submitted article doesn't mention it but my guess at connecting the dots is that it's related to EU Article 13's stringent requirement of "upload filters"[0].
Yes, Spotify's direct uploading "gave opportunity for small artists to share their talent" -- but that same mechanism also made it too easy to upload copyright infringing content.
Since Spotify does not have a machine learning AI copyright filter like Youtube's ContentID[1], shutting down the direct upload was their best course of action. Restricting uploads to their distribution partners (record labels) is the human version of the "contentid" algorithm.
Yes, Spotify's direct uploading "gave opportunity for small artists to share their talent" -- but that same mechanism also made it too easy to upload copyright infringing content.
Since Spotify does not have a machine learning AI copyright filter like Youtube's ContentID[1], shutting down the direct upload was their best course of action. Restricting uploads to their distribution partners (record labels) is the human version of the "contentid" algorithm.
[0] https://www.google.com/search?q=eu+"article+13"
[1] https://www.google.com/search?q=youtube+"contentid"