Having been blindsided by Rick Fielding on his recent radio show about the question, I have had another 12 hours to think about it (and now to read this thread). Another 2 cents.

To hang on to Sourdough's question, I think that we have been seeing the gradual replacement of his original definition of "tradition" with what the French call "bricolage" -- the hybridization of traditional cultures with global media products. An interesting anthropological book, "The Snowmobile Revolution" discusses how the Eskimos (Inuit) adopted the snowmobile in such a way that it supplemented their original hunt, and then gradually transformed it. They actively borrowed, tinkered with, and were changed by modern products. To go back to the original form of hunting could now only be done as a conscious reaction to modernity -- so even a deliberate adoption of tradition was affected by being a self-conscious choice.

That seems to me to be the fate of traditional music -- and it was already happening when the Carter Family and Jimmie Rodgers records hit America in the late 1920's, and you could probably stretch it back to the parlor piano music before that. What makes this quantitatively different is that there is no remnant uninfluenced source (except as pointed out, in some remote parts of the world, and even those are dwindling away). Doc Watson played electric guitar in a bar band: Cape Breton kids watch music videos.

This suggests that whatever the new tradition is will inevitably be sourced by "artist" choices primarily. Helena Norbert-Hodge in her book on Ladakh (near Tibet) contrasts the world before and after radio in that part of the world, and says that the big difference was the arrival of the sound of the professional high quality artist that made the ordinary locals feel inadequate, and made the local music leaders feel the need to copy those styles. If you think of the community of folk music as being made up of one pole of more focussed musicians and another of ordinary people who make music out of their experiences (and the two poles may often be found in the same person often), then obviously things tip in the direction of the "more focussed musicians" when you move into a media influenced world. Even if they are tapping into widespread concerns, these resonate with the experience of the community's dealings with global culture. This suggests that the traditional artist of today or tomorrow is in part using himself or herself as something of an "instigator of community" -- even if that community is only gathered around, and constituted by, one song for as long as it is played. I think this is why many artists (and certainly some here) feel so responsible.
yours, Peter T.