Why is this done? Tradition? Certainly it's an extra expense that releasing in pure digital format would not include -- and it's not like all the music is not mastered digitally now anyway -- nobody is mastering on tape and cutting and splicing....
1. https://en.wikipedia.org/wiki/Sound_system_%28Jamaican%29 2. https://www.youtube.com/watch?v=zpV7radKuwo
This is a mutually beneficial arrangement for DJs and producers. DJs can increase their audience by playing music that can't be heard elsewhere; This exclusivity provides promotion for a track before general release.
Radio DJs have a habit of speaking over the middle of an exclusive track, to prevent it from being ripped and used by other DJs. Exclusive dubs often mention the DJ by name in the lyrics, a tradition originating in the Jamaican sound system culture.
Vinyl releases are also much more profitable, which can be very significant for niche music with a relatively small market. A typical track download nets the record label 50-70p, but a 12" white label can net £3 to £4. If you only expect to sell a few thousand copies in total, a limited vinyl run can make a big difference to the bottom line.
Actually lots of artists master on tape.
What most don't do is track and mix on tape -- but there are some that do that too.
(and mastering doesn't involve "cutting" and "splicing" much -- that would be mixing).