I've said this before on other threads, but for the benefit of those who missed it then ...

IMHO, there is folk music/song on the one hand, and showbiz on the other. And what distinguishes t'other from which is NOT the source of the music/song, nor yet the style in which it is performed.

Showbiz is what happens when some people are paid for performing and other people pay to hear them. This definition applies even if what is being performed is 100% "traditional".

Folk music/song is what happens when people play/sing to entertain themselves - and anyone else who happens to be around. Nobody pays to listen, and nobody is paid for performing. (Though sometimes non-performing listeners may buy drinks for performers to show their appreciation.) This definition applies even if what is being performed is 100% non-traditional.

So, to the original poster I would say this: if your folk club charges for admission, then you are in showbiz, and showbiz rules apply. People who have paid to come in and listen are entitled to hear the best that you can provide them with. Furthemore, performers who are respected enough to attract paying customers deserve a fair share of the gate money. Performers who are good enough to merit a hearing, but not yet well-known enough to pull in an audience, may get a brief opportunity to display their wares if there's time to fit them in. And for the rest ...

For the nervous newbies who are still learning their trade (and for the enthusiastic no-hopers who will never learn) you may choose to run an open session on another night, with free admission for all.   And if you (and any listeners who may drop by) are really lucky, then some accomplished performes may also come along and participate, just for the fun of it. This will be folk music.

End of sermon.

Wassail!