It’s just much more profitable for record labels to have a few superstars than thousands of mini-stars. A usual person won’t follow and buy from 100 music artists. They’ll buy from 1 to 10 or whatever. Having large fandoms allows you to sell more tertiary things like plush toys and shit like that, it wouldn’t be feasible to do that for thousands of artists.

And in general there’s just too many amazing musicians. People love making music and as such there’s an oversupply. In addition to the above points that’s just capitalist supply and demand in play.