The harp was never an instrument of the people - poverty wasn't an issue. Ireland had an aristocracy that got steadily wealthier with time, like everywhere else in Europe, and they were the people who employed harpers.

The best-known contemporary of Carolan was David Murphy, composer of the song/march tune "Lord Mayo". If that tune is typical, his style was more like what we now think of as the mainstream of Irish traditional music than Carolan's was. According to one anecdote, he didn't have much time for Carolan's stuff, and said so ("bones without flesh"), whereupon Carolan gave him a beating.

But Irish mediaeval and Renaissance music was even *less* like modern folkdance-centred idiom. We have a few pieces from the Renaissance, mainly survivals in Scottish sources, and they have weirdly rhapsodic forms with irregular phrase lengths, like Arabic classical music or (perhaps significantly) the unclassifiable fringes of the piobaireachd repertoire. We don't know beans about Irish mediaeval music, but we do know what Gerald of Wales thought of it, and as Rimmer points out, the main thing we can conclude from what he says is that it can't have been very different from the art music he'd encountered in Britain or he'd have said so (he did point out some fairly minor stylistic differences). And that music was in turn all of a piece with what you could hear in elite circles in France, Spain or Germany.

The period most people think of as the decline of the Irish harp was the mid-to-late 18th century, between Carolan and the Belfast Harp Festival. We have a pretty good idea how the music-patronizing elite socialized then - much the same in Ireland as they did as far away as Sweden or Hungary - and a genre of quiet listening music that required in-depth knowledge of local or clan/family traditions to appreciate just didn't fit.