Everyone gets a free listing but if you want (typically) additional headings and (definitely) a big or bigger display ad you pay.
As a result if you are a general contractor that does kitchens and bathrooms and also sells plumbing fixtures as well you would have to spend the money to be listed in ads in all those categories.
Without having to spend money it ends up being confusing for consumers because it's like craigslist and inevitably results in people not being able to find what they want.
The "advertising funded" is actually a benefit not a detriment.
[1] I used the yellow pages to build a business from scratch that I actually sold. At the time I started I had no employees and there were established competitors (that didn't advertise) that did the exact same thing. The advertising is what made the business pretty much (in addition to price, quality service and all of that).