I think there are various things mixed up together in this discussion, each of which may be dying out or not. Let me see if I can tease them apart...

* A shared canon of music referred to as "folk music"

* A large-hall-filling scale of audiences for performances of "folk music"

* New lyrics, melodies, arrangements and renditions, described by their makers as "folk music", being created presently and in the future

* The majority of humans on the planet (i.e. the "folk") producing music, of any form, in any style, to audiences of any or no size

I think I may have missed some -- please help me bring them forth.

My thoughts on the above, depend exactly what is meant by the term "folk music". If the academic use (oral tradition, evolutionary song change) is meant, I tend to agree there are none or few left, and those are dying out along with oral traditions in general. And if you take it to refer specifically to the music popular during the Anglo-American Folk Revival, I also suspect this is receding into just one of many historical bodies of song, a far cry from it's previous prominence, although certainly it's not vanishing. If you take it to refer to music created with acoustic instruments, that is declining, but in large part due to replacement by audibly indistinguishable electronic replacements, rather than new sounds, so the difference is, um, complicated. If you take "folk music" to be the music appreciated and created by a distinct group of people, there are, and have been, thousands of such, and they (as a group) show no sign of decline.

(It's funny, after my care dividing the issue, I see that I combined it right back together in my thoughts... ah, so, I contradict myself...)

Does this match the experiences of the various posters on this thread? What have I left out, or misstated?