While rent-collecting is a major problem in the music industry, this is a rather reductive statement.
Especially when it comes to more niche genres, such as lofi, a label can be a major help to increase name recognition for smaller artists just starting out, especially when said label allows such non-exclusive publishing deals and still offers the artists fair compensation. In this regard, they often serve as, essentially, incubators.
This is also a common way for much larger, more well-recognized artists within a niche to give back to the community, by providing their own name recognition to (or even starting) a relatively small label that launches other artists in similar genres, in spite of the fact that said label is less likely to give that artist in particular more value-add than another, larger one.
Especially when it comes to more niche genres, such as lofi, a label can be a major help to increase name recognition for smaller artists just starting out, especially when said label allows such non-exclusive publishing deals and still offers the artists fair compensation. In this regard, they often serve as, essentially, incubators.
This is also a common way for much larger, more well-recognized artists within a niche to give back to the community, by providing their own name recognition to (or even starting) a relatively small label that launches other artists in similar genres, in spite of the fact that said label is less likely to give that artist in particular more value-add than another, larger one.