Given a subscription model, it probably maximizes profits to charge a certain fee and not increase that fee each time a new expansion is added. This is totally unfair/illogical/dumb, but so is selling next gen consoles at a loss and letting you get away with stealing the hotel towels and charging me the same for my haircut the times I accept the complimentary 20 oz of coke and the times I don't. People aren't rational. The answer to the thought exercise of releasing new paper expansions and not adding them to the online game so that the fee won't increase is that people would actually stop playing online due to the relative deprivation from new paper expansions coming out, and not getting to have them. Which again, is unfair, and illogical, they didn't actually lose anything, but that's just what reality is.
It's not always good to assume people are fair and/or rational, they buy bottled water and save money by skipping preventative medicine.
If you don't implement the new expansion, you lose subscribers. If you implement the new expansion and increase the fee accordingly, you get some new revenue from the people that stay, but you still lose lots of subscribers. The subscribers that would be lost due to not implementing the new expansion almost certainly covers the costs associated with implementing the new expansion (unless implementing the new expansion is harder than I'm guessing or online dominion becomes even more sparsely populated than I'm guessing, in which case I think the "don't implement anything" strategy is an improvement over offering a higher tier)