I've recently moved to Asheville, North Carolina where there is a thriving old time, bluegrass, and ballad singing tradition. I believe that traditional music gets past along here through family and community gatherings. You go to a festival here and its jammed with local people of all ages listening to or playing and singing the music and songs.
You can take trad music and play it in clubs and concert halls all you wantg but you'll never preserve it there. If you want it to continue, you have to catch the kids before they're consciously aware of it. A six year old will find a 12 year old doing trad music cool. And a 12 year old getting praise for doing it from a 20 or 30 or 60 or 70 year old who's also showing him or her technique is probably going to continue with the tradition.
That's my thought on it. And my observation.