I'm not going to be able to finish this argument - holiday.
Of course folk clubs declined - count them. Listen to the dross performed in them, listen to the poor performances, the idiots popping their cheeks "then out of his knapsack....", hear the bad manners of people joining in when they have not been asked to, visit the folk clubs where you will never hear a folk song all night.
Some time along the line the clubs became refuges for lazy, untalented and indifferent performers who simply don't feel it necessary to work at what they are doing - I've even hear it argued (not so long ago on this forum) that good performances are detrimental because they put off the mediocre.
In many cases the clubs became refuges for those who failed to make it on the pop scene.
Why did they decline?
A whole raft of reasons; the main reason being that they fell into the hands of people who don't like or understand folk music (recent thread - folk clubs that only do folk songs are boring).
Jim Carroll