It's because the right that belongs to the performer and the label was a new right that was created in 1997 by the Government of Canada. It's called the neighbouring rights. They created that new right to address this problem.
The example I give is my wife's in a band called Cowboy Junkies and she sang a very famous version of Lou Reed's song Sweet Jane. The problem was that Lou got paid all the money for Margo's version. Margo didn't get a nickel because she had no right in that performance.