Actually, if we focus purely on the 'music' side, it seems fairly healthy to me.

If I wanted to, I could go out to a folk club or session every night of the week. (I live in London) The majority of the material at said events would be traditional.

Yes, the audiences tend to be quite old. But there are enough people involved in their 20s, 30s and 40s to suggest that traditional folk singarounds, gigs and sessions will continue to exist in London for several generations to come.

In terms of recorded music, I'm encouraged by musicians such as Stick in the Wheel, Lankum, Cath & Phil Tyler, Alasdair Roberts and Nick Hart, who are making music that's a lot less sugar-coated than the folk mainstream.