I think you have a point, but I disagre that the reason is open mic events at the festivals. Like yourself I very much love the 'fringe of festivals. Apart from anything else genuine Folk Fans like me, I run a Folk club, are fast being priced out of the festival scene, where prices are purely tailored to the upper middle class pseudo week end folkies, few who will have seen the inside of a folk club! You can usually identify these types by the new spotlessly clean tennis shoes and the designer jeans.
But what I find is an inceasing lack of open mic events on the fringe of fests, more so inside, I belive because the paid artists are embarrassed by the competition. Maybe we should band together and arrange 'fringe' sessions in pubs near the big fests, which is how the festival thing all began!