It refers to the relationship between the record company and the people who buy records.
"Shoveling" often goes together with the vulgar, bad word "shit." It's not as bad as it used to be, but it is still a word you shouldn't use. Notice that here, they substitute the less-bad word "crap." In some contexts, if you hear a mysterious reference to "shoveling," it is a sly way of suggesting that there is an awful lot of shit around, without needing to use the word "shit."
"They'd been shoveling a bunch of mediocre crap" means that they had been producing, releasing, and selling a huge number of mediocre songs.
"...to people who they devalued" means that they didn't respect or appreciate the customers who bought the music. They were arrogant. They believed that they didn't need to pay attention to their customers or treat them well, because no matter how much "mediocre crap" they produced, their customers, whom they thought of as stupid, would buy it.