LJW, the core point (I think) is whether folk is the source of the entirety of ones income. How much that income might be is at most a subsidiary point.

WMD, go on, pick the gratuitous philological exhibitionism out of that!

Yes, lots of people would rather sing and play than sit and watch. I often don't go to any of the main concerts at festivals my side dance at. The only concert in the last year I felt I really HAD to go to was the Young Coppers at the Pigs Ear minifest (and then sod me I felt unwell and could not last for the second set).

Oh, and for the purposes of this thread the main point is also not whether folk-ish music is folk or not. I believe that not knowing the difference dilutes what marketeers would call the "USP" (the unique selling proposition), but others believe in brand diversity. One of the consequences of polarisation is that today many who like one type of music will not pay to see another. I once went to see a fine (I had been told) Scottish singer of traditional material - and alas she was ill. An excellent performer was substituted at the last second and I felt cheated and very disappointed because the said substitute was 100% contemporary.

When I was last involved in running a club we often had good-ish turnouts for guests - rammed for Mundy-Turner for example, standing on the landing outside for Les Barker and for Sid Kipper, but almost no-one turned up for Keith Christmas's Magic. But the only way we could afford guests of that calibre was because of a gratuitous hump in our cash flow. Back in the early 60s one could ram a club full with an entry fee of 2 pints of beer (equivalent). Now an entry fee of 2 pints of beer is where the attendance starts to fall off a cliff unless the artist is a superstar.

Not enough money in leads to not enough money out to the professional musician. But I would guess that back in the early 60s there was Sidders and Cambridge and not a lot of other festivals whereas no one can if minded and able to afford it go to a folk festival or folk ale every weekend all summer.

The other factor I see is that back in the early 60s there were a few guitarists in particular on another planet from the rest. Soon there was a small but small band of killer fiddlers and squeezers too. Now there are hundreds of semi-pro and even amateur players and even bodhranners who are spectacular - but not so many who pass the old grey whistle test.