I agree with Arky's assessment. Of necessisty, folk music must be tied in with the history and tradition of a specific sub-culture. I don't think that this includes manufactured sub-cultures that are spawned by the music industry such as "hip hop" or "flower children". Some would argue that "country music" or "blues music" are spawned by a specific music industry but the tunes that are written for a popular music market don't qualify in my book. It is possible for a music industry to appropriate folk music for it's own ends. This is what happened in the twenties with country and blues music. The folk music revival of the late fifties was a similar attempt on the part of the music industry to codify the music to sell it to a particular demographic, the college kids and upscale liberal communities in the larger cities. The same thing is happening today with the re-labeling of the term to include professional entertainers and songwriters.
What is not folk music? That's easier. Classical music, modern or progressive jazz, rock and roll, warmed-over pop tunes from the sixties, highly orchestrated popular music of the forties, atonal music, opera, musical theater, cabaret songs for night clubs, special material written for performers, and folk styled songs that are written in that idiom but not associated with a particular cultural milieu. This cultural association is traceable to a long-standing tradition of music that can be documented and studied by folklorists and ethnomusicologists.
I don't buy the everything-is-folk-music-if-people-sing-it argument. It's a specious argument in my view.