Presumably there's a market rate that users are currently willing to pay and as such an increase of pay from Spotify to artists would mean they need to increase the fee to their users. This would make them less competitive and possibly lose subscriptions.

I've already jumped ship from Spotify over to YouTube music for example because in my country it was a better deal.

[–] Matte@feddit.it 18 points 1 year ago

of course it’s a better deal, Youtube Music barely pays anything. it’s even worse than Spotify, and most of their streamings come for free, which is enraging to say the least.

anyways they have two paths: they either suck the costs in and increase the subscriptions (and lose customers in the meanwhile, so they’ll earn less in order to give more money to the small artists) or they cut the share they’re giving to the majors, which is the biggest percentage of the pie. but majors will simply boycott spotify and create their own platform, just as it happened with netflix.