Pubs pay so little because they can get away with it. Unfortunately supply outstrips demand with regards to 'live' acts. Landlords aren't interested in whether you're a singer with backing tracks, or an 8 piece disco band with a brass section, they want to maximise their profit margins.
Why should they ante up and pay a professional band at several hundred notes when they can get one of the regulars to strap up with a MiniDisc player and a mic?
For the most part these are not live venues, simply pubs who have decided that it's a nice little earner.