I vividly remember my father coming home from Borders Books & Music one fateful day in 1998 with a boxed copy of Red Hat Linux 5.1. (This was the distro that eventually became Fedora, not RHEL). It was the first Linux distro I’d ever used, but my dad also had some older SuSE and Slackware CDs and floppies in his archives as well. I’m confident Red Hat has always paid their employees, and I’m confident SuSE GmbH did as well.
Famously IBM did eventually buy Red Hat, but not for another 20 years. The fact is, Linux was alive and well and growing as far back as the late 1990s, and devs were getting paid. You could literally buy CDs in a box of an installable Linux distribution at an ordinary retail chain bookstore in 1998.
And for whatever it’s worth, the reason Linux took off the way it did when it did was because the Dot Com Bubble helped pump smaller companies like Red Hat or SuSE up, and they were certainly selling floppies and pressed CDs at a margin like Shareware as well, since most people didn’t have the time or hardware to download and burn ISOs until the early/mid-2000s when P2P music took over the world.
(I remember. I was there. I guess I’m old now…)