there are a lot more situations where music is available on tap.

Someone listening to a tune on an iPod is a very different thing from them hearing it in a shopping mall, or a nightclub. The experience of the receptee/s determines the nature of the music, be it pre-recorded or otherwise. The same recording can be very different things according to context; it changes accordingly.   

It's still Traditional Folk Music / Song because...?

...of exactly the same criteria that made the other stuff Traditional Folk Music / Song. Not a statement of faith, but a statement of fact. If Folk Music is about process & context rather than a mere Genre, then even by the somewhat nannying strictures of the 1954 Definition even the above mentioned music-on-tap becomes Folk Music.

Try this: Irlam Royalettes Morris Dancers

It's interesting to note that even the tempo of the music is determined by the principle dancer, the digital sound system having the facility to change tempo without affecting pitch. We saw this happening yesterday at Tram Sunday here in Fleetwood, where the leader danced in the tempo. Amazing stuff I'd say, and a living, thriving, Folk Dance Tradition to boot, with Living Thriving Folk Music to match - at least for those of us who recognise that Folk Music is a whole lot more than Genre - and involves all the things enshrined in the 1954 Definition, and more besides, such as function / process / community / transmission / change / social context etc.