This is not restricted to Folk.

If you were to look at the mainstream, ie. rock and pop, you will find that the media only gives exposure to big stars and new names that are making waves, ie. selling lots of CDs and gig tickets.

You are very unlikely to see any coverage of all the talented bands around the country, selling a few CDs to their small bunch of fans, and normally playing to 2 men and a dog. Yes, audiences in the rock genre can be even worse than in folk clubs for relatively unknown artists.

I can remember back in the 80s and 90s, when I was doing sound at quite a few rock venues, there were numerous occasions where the audience consisted of only the bands' girlfriends. There was actually one occasion where there WAS 2 men and a dog!
And one memorable night when nobody, yes NOBODY, turned up.

Back to Folk, and I remember when Seth Lakeman was starting out, he did a few guest spots with the Oysterband, to get himself known a bit. I did sound the first time he came to Rugby Roots, and was still fairly unknown, and there were 40 people in the audience. On his return, about 6 months later, and the profile and media attention had started, there were nearer 200.

So, yes there is a Catch 22, but it is probably the same in all musical genres.

Summed up, when nobody has heard of you, nobody comes to the gigs. When you have gained a profile, and even better a 'buzz', people will come. The difficult bit is getting from obscurity to notoriety.

It's all about marketing and media, like it or not.