The folk tradition, as I understand it, is/was the gathering of 'ordinary' people at work, rest and play, who sang (well, badly or indifferently) songs they happened to like (good, bad or indifferent). There was no financial transaction involved - apart from the buying of the odd pint.

And no, musicians have not always been paid to play for dancing.

And troubadours/minstrels did not charge a fixed entrance fee - they relied on 'contributions' (it's called busking).

There are those who will always try to make money out of something - it's a tradition (it's called commerce) - but that's a different tradition entirely.