I think that what's at the core of the very question -- the question of "where have the American audiences gone?" is flawed to the extent that it accepts a priori that the brief times in folk music when it might have had an audience is the norm, not an anomoly.

But it's FOLK music. Audiences of any great size would be the anomoly. By definition.

Any great audiences are either an anomoly, or they are because someone has taken stylistic elements common to "folk" music and turned them into pop music -- P,P&M, Weavers, Kingston Trio, etc. Just as soon as it is that....it is not folk. It is pop.

The thing that is keeping MUCH of music from the folk music tradition alive today -- especially with younger people -- is the new virtuosity that has caused a renaissance among the young...with festivals, workshops, clubs, schools, recordings all OVER the place -- they're ubiquitous. It's the thread that can be traced back to Scruggs-White-Rice-Sutton-Thiele-Hull and on up. It's the "athletic" element of hot licks and INCREDIBLE musicianship that has younger people intrigued and entering the fray. And older people -- "folkies" -- can't keep up. They don't have the chops. If they weren't already hot (like Scaggs or Rice) they are passe'.

Some older people appreciate this new view of the folk process. Other old people are just intimidated the heck away from it -- they want some respect for ground they may have covered thirty years ago. They may get if from some of the younger folks. Mostly not though.