A few points, in my opinion, if the folk festival moved into pop / rock:

1) The fringe would disappear - it seems like the fringe and the festival have a symbiotic relationship. Without the fringe, there is less to offer to punters, therefore less punters. (I use 'punters' because money is probably the main factor)

2) For the size / potential revenue / cost etc, only small-time rock / pop acts would be available in comparison to Folk, where for the same money, big name folk acts can be brought in. Who wants to see small time bands when you can see bigger/better bands at Leeds etc?

3) Other smaller rock / pop festivals have been extremely unsuccessful

4) The folk festival has been a folk festival for 25 years, surely small adaptations can make this continue, big changes would just kill the whole thing off! YOu would lose the regulars etc.