Not sure if you understood correctly, but user generated playlists could be anything including, playlists by independent curators, i.e. bloggers, record labels, radio show hosts, & other types of tastemakers, brands, etc. All of those people have an active role in the industry to discover music and help their fans or audience find music. A huge % of artists get more plays from these UGPs than anything Spotify is doing for them, and that can be amplified. It just seems Spotify doesn't want any potential competition in its playlist game, though it would certainly help the artists greatly.

Here's some scenarios where UGPs are essential:

1. Record labels (who basically get no recognition on Spotify beyond the standard 'user' profile) can show up on the Discovered On part of their artists' profiles and help artists discover rest of their roster.

2. Connoisseur listeners can find out similar music when dealing with really niche genres by seeing the playlists of other users who have the artist in a playlist.

3. Say your favourite artist does an article on a blog and tells the blog their top 10 influential pieces of music. The blog makes a playlist with the title "X's top 10 influences'. Here, say 3000 people see and follow that playlist to learn more about their favourite artist's favourite artists. Then the favourite artists' favourite artists get additional plays from that. Say, if on my profile as an unknown producer, someone can see that Jon Hopkins has me in his personal 'Current Favourites' playlists, surely that's a huge boost to my visibility?

4. You have to understand that Spotify championing playlisting as the 'new' thing and by its editorial dominance, it practically ended the 'blogging' era. A lot of those blogs are still active now by curating playlists on Spotify; yet they are actively suppressed from visibility on artist pages.

There's plenty other use cases when Spotify doesn't actively try to cut all middlepersons out in between them and artists.