The point about a song being a folk song is that it is one which survives the selection process. Thus it is a song that a multitude of people have learn and sung, a song that many of them have recorded.

If a song is lost to posterity because only one person has ever sung it, and only one other person has recorded it, on a cheap and nasty CD which self-destructs ten years later, and no one else can sing that song from memory, then it ain't a folk song, and so it doesn't matter if it has been lost.