"I always thought folk music was the song and tune passed down through generations, that had stood the test of time and usually had at least one dead body in it... but therein lies a whole heap of cans of worms...."

No, you are describing traditional folk song. The folk music that is being discussed here is the type that became relevant beginning with the folk revival and continues through today.

I think the folk music that Dick is describing will always carry on in one form or another. It has always been there. People still like to make their own music - perhaps not sitting in a park or in a group with friends, but they are making music and that will carry on.

As this header notes, this discussion concerns the various clubs, coffeehouses, festivals and other such venues that introduce folk music as entertainment and to educate. Those are the audiences that appear to be shrinking.