I'll let the UK members talk about their folk clubs and definitions of trad music.

Apologies for the drift. Here's the way it looks in Chorlton, Manchester, England, England, across the Atlantic sea.

One singaround, monthly, mostly trad, doing well (10-15 people, almost all performers).
One folk club running singers' nights, most weeks, mostly non-trad, also doing well (30-40 people, about half performers)
The same folk club with a guest act, occasional, mostly non-trad, not doing so well (20-30 people)
One tunes session, weekly, all trad, doing well (15-20 terrifyingly virtuosic people)
Several bars with PA, some with open mike nights, apparently doing well (but whether this has anything to do with the music (or indeed whether anyone listens to the music) is unclear)
An Irish Club, doing well, frequently puts on one of the local C+W bands (not trad)
Occasional folkie acts big enough to run to an actual gig, not doing terrifically well unless they're really big - there's "headlining at the folk club" and "headlining at the Lowry,/a>" and not much in between.

What that tells me is that people, round here at least, will come out to
a) perform themselves or support friends who perform
b) dance
c) drink

but not so much to

d) listen to live music

It's a weird situation, because from my perspective as an amateur performer both the folk club and the singaround represent a scene that's doing really well. (When I've worked on my whistle for another 30 years I might be able to sit in on the tunes session, and then I'll have the set.) But to a pro, semi-pro or would-be-pro performer I can see that the same landscape would look rather barren.