Avraham Fried will not be a judge this year. He just happens to live in the same neighborhood as the organizers, so they asked him to get involved and he obliged. Even if he was paid for it, whatever he got is nothing compared to what he can make for one performance, and he was also subjected to mockery for his decisions.
It says quite a lot that Lipa is the one who is replacing him.
Pellin will also not be judging this year.
The site is a commercial venture by a marketing firm, with which Pellin has no connection at all. Pellin, for all his shtick, is, like Fried, a frum Yid. The organizers appeal to a modern audience. An erlicher singer with talent has no hope of winning, and those who have won have not even made it as wedding singers.
However, a ban will only increase the popularity of this shanda among those to whom it appeals. Let them have their fun; the contest will burn out on its own in due time.