The point of identifying something as "folk music," back in the 19th C. even before Baring-Gould, was to emphasize two ideas:

1. uneducated, provincial people were capable of producing - or at least modifying in artistic ways - music and song that was, by the stanards of the Romantic era, as moving as anything created by trained, educated musicians

2. this music was part of an independent tradition that began in the very dim past and was being carried on, with little notice by the upper classes.

Slowly, over decades, and for various reasons, collectors of "folk music" began to interest themselves in other kinds of old-time music as well, notably broadsides printed by urban entrepeneurs and music-hall songs sung by professionals. Some of this music was related to traditional amateur music and some wasn't.

Jump ahead. By the late '50s,big record companies discovered that modern arrangements of trad songs would move LPs. Within a few years, many of the performers who'd made a success with their arrangements began to sing more and more "pop" material, partly because the "folk boom" was fading. Pretty soon, "folk music" was just a marketing category meaning "pop music sung to a guitar by somebody who used to sing souped-up folk songs."

Big changes, and why definitions of "folk music" vary so widely.

But "Will trad survive?" Depends. Certain trad songs, now far more popular than they were before recordings ("Farewell to Liverpool" is a perfect ex.) will continue to be performed for a very long time. On the other hand, they don't seem to be changing much (a little, but overall not much) from the most commercially influential versions. Also, as audiences become more passive, the "traditional" sources shrink down to people who get up on a stage to perform. That narrows the idea of a widespread and vigorous "tradition" way down from the days when it was nice to think, "Most everybody outside the big city can sing 'Barbara Allen' but not many inside. That kind of music that's special because it's hard to find!"

Of course, now it's as easy to find, esp. online, as any other kind of music.

The real issue might be, "How far does trad have to change before it doesn't make sense to call it 'trad' anymore because now it's just another genre of pop music?" The properties of the category have changed hugely since the 19th Century.

Just my two cents.