I must say that this is as good as discussion as I've seen on the subject--here are a couple more pieces of fodder for the discussion--

"The public demand for it just isn't big enough"--this is is the real issue--but I think it is both true and not true--True in the sense that there certainly aren't the venues that there once were, which is to say, not a range of well attended, paying venues for folk performers--but I think it is not necessarily true that the "broader audience" no longer likes folk music--just that they don't have an easy way to listen to it anymore--

Part of the reason that "Country Music" is such a big industry is that there is a great network of venues--more than few folks have crossed over from being folksingers or singersongwriters, simply because if they do, the work is there--I subscribe to the Build it and they will come" theory, that if similar, but "folk" oriented venues were around, the audiences would be there--