As brucie said, you really need input from actual promoters of successful festivals. I'm guessing someone here will fit that description. I can only tell you what I found compelling (or not) about festivals I've attended. Keep in mind that I've never attended one outside the US.

The Most successful folk festival I've attended is the University of Chicago Folk Festival. There are many things that have made this festival successful over the last 45 years. A few of the things I appreciated were:

• It's large. Large enough to pay for one or two internationally acclaimed acts. It really helps to have a guaranteed draw at the top of the list.
• It isn't limited in its choice of genres. They've included old-timey, Scots-Irish, country blues, Chicago blues, zydeco, Cajun, bluegrass, cowboy, gospel, folk interpreters, steel drums, country, just about everything.
• The festival lasts for three days and includes formal concerts, free workshops given by booked performers, space and time for all types of jamming, lectures and films by established folklorists.
• It isn't just a place to hear and play music, it has the active support of the University of Chicago, The Illinois Arts Council, and respected folklorists.
• It's always a place to learn. You'll be introduced to something you've never heard before.
• The quality of the performers is kept very high. Even total unknowns will be outstanding spokesmen for the music they play. They will never be folk music hopefuls looking for a gig. Often the people booked to play concerts are legends in their fields.

U of C is the high end of things. There is another folk festival I used to attend in Illinois called Willow (The Willow Church Folk Festival — Stockton, Illinois). I mention this one partly because it was fun and partly because it is still going after 35 years or so. Willow represents the other extreme from the Chicago Folk Fest. It's two days long and offers overnight tent camping across the road. There is no town to speak of. Just a church at a dusty crossroad as I remember it. The camping area is a cow pasture with a steam running through.

• No paid acts at all. (Cheap admission)
• The shows all feature performances by those attending. I've seen this work out pretty well; the late Bob Gibson used to attend and perform.
• The opportunity to build ad hoc ensembles from people you just met and do a high quality performance on stage.
• Jamming in the camping area any time. Attendees organize their own groups and set it up any way they like.

I've also attended bluegrass festivals, large and small, and blues festivals.

The Mississippi Valley Blues Festival is held on the July 4 weekend (US Independence Day) in Davenport, Iowa on the levee right next to the Mississippi River. It's a big commercial setup with beer tents, food vendors, two performance stages going all the time, record (now CD) sales and the whole works. It goes on for three days but offers no camping or related accomodations. Performers include a large array of nationally and internationally famous blues professionals. It's a great time.

I haven't been to a large bluegrass festival in 25 or 30 years so but the big ones had several things in common back then.

• They lasted for several days.
• Camping facilities were available.
• Food could be purchased on the grounds.
• Though not sold on the grounds, drinking was permitted.
• Most of the bands booked, in those days, were the top bluegrass bands in the world. You'd get Bill Monroe, Lester Flatt, The Country Gentlemen, Mac Wiseman, Ralph Stanley, Reno & Harrell, Larry Sparks, Jimmy Martin, The Lewis Family, the list goes on and on and they'd all be on the same show! You'd see the whole line of Flexible travel busses lined up at the gate when you drove in.
• You had the chance to jam with some of the best players anywhere and often even the booked performers.
• These festivals always charged enough to ensure their profitability but it was well worth it.

I still attend the occasional small local bluegrass festival. These are much different events and I usually go more to see and jam with friends than to see any of the shows. These are usually tight-assed “family” affairs that enforce alcohol prohibition and seem to worry a lot about the deportment of festival goers. These small festivals continue for years on end for several reasons.

• There is a promoter who works to make sure the event is well planned, has capable acts, is well advertised and continues to please a loyal core following.
• They draw mostly from an area that doesn't exceed a radius 100 KM or so.
• Most of the bands will be family bands that enjoy spending their summers playing these little festivals for their loyal, largely rural, following. I watched Rhonda Vincent grow up this way as part of her family's Sally Mountain Show.
• These little festivals is where one can still hear the down home music of rural America. Nice folks and a good time.

Common amoung successful festivals is probably a focused and dedicated promoter or promoting organization, pockets deep enough to keep going until the festival becoms an institution and making sure that attendees have a great time, don't get hassled, and feel they got more than their money's worth.

      - Mark