Not long ago, I read an article about the band Capercaillie, where Manus Lunny described their music as a sort of Celtic soul music. I had no problem understanding what he meant by that statement, which was not made in the context of trying to market the band. Rather, he seemed to be trying to describe how he views his people's traditional music done in a contemporary style, in a similar way that African American musicians viewed "soul music" as their people's traditional music done in a contemporary way. It was a comparison which made perfect sense to me, and I didn't sense that Capercaillie was now trying to market itself as an African American "soul band" in order to make the big bucks. Which would be inherently stupid, considering "soul music" hasn't been in vogue in the African American community for quite some time now, any more than it has been among European or European American music consumers.
Defining folk music or soul music is a pretty self-limiting exercise IMO, intended to maintain false divisions of "us vs. them" in instances such as the one Dave the Gnome raised. Which seems always to be done with a haughty air of superiority about "us" and sneering condescension about "them". And that to me is just plain mean-spirited begrudgery, exhibited far too often by the so-called folk purists, folk fascists, folk nazis...whatever people wish to call those with pronounced intolerances who inhabit the folk community in Britain and British North America.