The actual distribution is not free, management companies take a huge cut both formally or informally. For some reason[0], you can't just upload your music to Spotify or Apple Music directly, you have to have a middleman, and that market of "middlemen for unsigned artists" is just three companies[1]. They all suck in different ways, but there's a
lot of creative-class wage theft going on, even beyond Spotify just underpaying indies on rights.
You can upload music directly on YouTube, but they pay very little on short videos and music streams. And there's also sketchy management companies and MCNs there anyway.
We also have to keep in mind that the music industry loves complicated and unclear ownership structures over the music being produced. Nobody completely owns a music track; there's separate copyrights for melody and recordings, both of which get separated and broken down in extremely opaque ways. Remixes and sampling make the rights situation even more complicated, and at best, mean that the person who made the remix or used the samples has to share revenue. At worst, you get to deal with all sorts of bullshit claims (or lawsuits) from people who think they own more than they do.
Insamuch as cheap distribution has flooded the market, it's often either in the form of attempts to launder money through Spotify[2], or online advertising style click fraud of some kind. The problem is not that there are too many honest artists, but that nobody does proper KYC on indies. Either they don't care if you're legit or they don't want to work with people at the small end.
[0] In the case of Apple, long-standing trademark disputes with The Beatles prohibit them from representing artists directly, which is how management companies got their start for self-published acts. However, this would not bind Spotify or other streaming services.
[1] CDBaby, TuneCore, and DistroKid, if I remember correctly
[2] e.g. buy a bunch of Spotify subscriptions with drug money, publish a bunch of nominally unrelated artists on Spotify, listen to them 24/7, then the Spotify payments are clean cash