I've avoided posting on this thread because I came to it late and was wary of the increasingly personal comments therein but, for what it's worth, two suggestions:

1. Internecine squabbling of the type we've seen above can be very unattractive to some of those new to the music. It may have discouraged some of the more tentative participants. However, ugly as it can be, many people love it (why do you think the NME and the tabloids used to report every bust-up between the Gallagher brothers?) ... it could actually be a selling point, so it seems an unlikely reason for the mutation of the folk clubs into another beast.

2. The first post in the thread made an entirely sensible suggestion: the folk club generation had kids and took them to more family-friendly festivals. The kids grew up and many became players, but more often in the kind of sessions that they were introduced to at said festivals, rather than the folk clubs which excluded them because they were in an almost exclusively adult environment. Between these two generations, there was something of a 'lost-to-folk generation' for whom home-made music meant forming a punk band or putting together samples on a computer were perfectly valid alternatives. It was still 'the people's music' even if it wasn't traditional.

As for 'the tradition', it survived before folk clubs and I'm certain it will even if they disappear altogether: the particularities of venues matter less than that spaces to perform are available in some form or other.

Is that a bit 'Pollyanna'? Probably, but there's good evidence on which to base such optimism: traditions exist because they live and continue and HAVE lived and continued (often for centuries), not because there's one particular outlet in which they can be protected. Change happens - why not enjoy the ride?