"Beatles covers bands operate as conservatively as the Chinese court, but for most re-performances of recorded music there's no particular reason to stick closely to the original, and generally people don't."

That may be true of musicians trying to make their own version of a song (which in some cases then becomes better-known than the original). It's not true, obviously, of cover bands. Less obviously, it's not always even true of original artists, who are often obliged to mime on stage to their own studio recordings because these can't be reproduced live.

When it comes down to ordinary people singing these songs, the sound image in their head is invariably the best-known recorded version. Hence the popularity of karaoke - people can sing these songs to a backing track which usually tries to reproduce the original record.

The real obstacle to modern songs become "folk songs" in the original sense is this existence of a permanent recorded touchstone to which people can always refer (even if only to deliberately do something different). The involuntary changes which used to arise from different interpretation of a written text or a poorly-remembered oral one are unlikely to survive against this point of reference. The deliberate changes of words or tune with which a folk singer stamped his own identity on a song will now be overruled because they're "not right".

This isn't to say these obstacles can't be overcome, just that it's more difficult for a popular song to become "folk" than it used to be.