Earlier I outlined what I believe to be the implications of the 1954 definition. If I am wrong and what I described is not folk music, then tell me what I've missed. If you feel the term needs re-defining, feel free to do so, but you're going to have to convince a lot of people who, though they may not attend the clubs, are still up to their ears in the music, and who, if we are wrong in our analysis, are sending out a distorted message which is the one that will prevail.

I fear your message is distorted, well & truly. Here again are my points regarding the 1954 definition.

Folk music is the product of a musical tradition that has been evolved through the process of oral transmission.

No musical tradition has ever evolved without the process of oral transmission.

The factors that shape the tradition are: (i) continuity which links the present with the past; (ii) variation which springs from the creative impulse of the individual or the group; and (iii) selection by the community, which determines the form or forms in which the music survives.

All musical traditions are thus shaped - from Hip-Hop to Free Jazz, from Karaoke to Gamelan, from Drum & Bass to Dub Reggae, from Elvis Impersonators to Crusty Didgeridoo Players, from Trad Jazzers to George Formby Enthusiasts, from Neo-Medievalists to Death Metal Headbangers. This is the very nature of musical tradition, simply to be utterly dependent on the people playing it, who, in being fully conversant with the past are nevertheless re-determining it for both themselves and thus assuring its future survival.   

The term can be applied to music that has been evolved from rudimentary beginnings by a community uninfluenced by popular and art music and it can likewise be applied to music which has originated with an individual composer and has subsequently been absorbed into the unwritten living tradition of a community.

All music has evolved from rudimentary beginnings and I very much doubt there has ever been any such an uninfluenced community except in the twisted fantasies of academics who postulate such bullshit. Otherwise - all music has thus originated and been absorbed and transformed. In the composing of a Pop Song, for example - an idea becomes a composition, which is then further interpreted by a community of arrangers, session players, engineers and producers ever before the finished product hits the shelves. There we have The Folk Process in a nutshell. Was anything ever unwritten? What of the Chapbooks and Broadsides? Hell, even The Copper Family sing from a fecking book!   

The term does not cover composed popular music that has been taken over ready-made by a community and remains unchanged, for it is the re-fashioning and re-creation of the music by the community that gives it its folk character.

No music ever remains unchanged, however so conveniently one might qualify the word change; each performance is a renewal within the expectations of its community which are further transfigured by its corporeal & empirical experience. A performance of Purcell's Dido and Aeneas in 2009 will be, out of necessity, very different from a performance of Dido & Aeneas within the same community from 40 years earlier. Ditto a rock band comprised of variously talented 14-year-olds going over Eleanor Rigby in a garage are re-fashioning a music, re-creating it, and giving it its folk-character. Likewise, a Folk Singer adapting Eleanor Rigby to their own needs and abilities for performance at his local Folk Club is effecting a transformation over a given piece of music, thus giving it its Folk Character.   A Karaoke singer singing Eleanor Rigby is doing exactly that too, likewise the worker who whistles the melody of Eleanor Rigby as they go cheerfully about their daily business, or else the schoolboy singing Eleanor Rigby as he walks to school.