They did. Curse runs ads on their website and client, and does a revenue split with addon authors. The idea is that hosting your addons drives traffic to Curse, which drives up their ad income, so they give authors a bit of it to incentivize them to continue sending traffic to them. I think the exact split is based on your addon's install base through the client.

The end user never pays for the addon. They can pay for a premium client subscription, which gets you priority bandwidth on patch days, one-click updating, no ads, and that sort of thing, but you're very solidly in paying-for-service territory then, and there are still fully functional free methods to get the same addons. I think what Blizzard mostly wanted to avoid was an environment where some players could gain an advantage over others by purchasing some addon, and they didn't want the in-game experience turning into an advertising slum.