Looks like a pretty good definition to me, but a good many respondents have disliked "oral tradition". Perhaps "aural tradition" would be better. That would cover a fiddle tune learned by watching the fiddle player and listening, but not talking to the fiddler. Also it would cover all those field recordings of folk songs that would have been lost had they not been recorded.
My definition of a folk song, which is not an improvement on the given definition, is that a folk song is a non-degenerate equivalence class of tunes and words hand down aurally from generation to generation, where two sets of words and tunes are equivalent provided any reasonable person on hearing both would say,"the words are different and the tunes are different, but they are obviously the same song".