Golden Rule: Don't generalise!
I don't actually recognise the scenario debated here in relation to our city.

Folk Clubs are thriving - here's what's happened in the last 15 months:
Spring 2007 - new Club starts in 'away from city centre' pub. It continues successfully despite recessions, smoking bans and a short notice enforced break during this April.

Another club (twice weekly) was having problems in its two different venues. !5 months ago it found a single pub for both nights and people now travel for many miles away to sing there.