I believe that the distinction arose in the late nineteenth century, when it was widely assumed that true ballads and "folksongs" were not composed by individuals but by a "singing and dancing throng."

It was based on the naive view that the word "ballad" originally referred to dancing, as well as on the hifalutin assumption that really good songs just couldn't have been composed by just one illiterate.

And all true folksongs were thought to have been created by the illiterate. It was a view encouraged by Victorian Romanticism, which in its most foolish form held that rural life and simple, rural people were the embodiment of virtue and natural inspiration.

Except for chanteys and such, that view - "folksong" versus "author song" - was pretty much exploded by the late '30s.

I'm not sure that anyone here is trying to bring it back.