Just to play devil's advocate here ... count the number of pubs in your town/city then ask yourself how many have a folk night. I think there definitely WAS a tradition in the pubs but it shifted for a couple of reasons: Juke boxes and Social Clubs. The latter, especially in the north of England, are still very much a bastion of live music (albeit not usually traditional folk).

What I found more interesting was the suggestion that if people don't want a licence it's because they don't want live music. The old saying 'use it or lose it' come to mind.