It's true. I took a look at the Newport Folk Festival lineup a few weeks ago, and was surprised at the absolute absence of any artists who play traditional music. There were some folky people on the list—the Avett Brothers, Brandi Carlile—but there was much more alt-country and straight up indie rock acts than there were folks who come from a background of traditional music.
A few years ago, I spoke with Ron Aja, the Festival Director for Pete Seeger's Clearwater Music Festival. He noted that many of the folk festivals were toying with removing the word "folk" from their titles and descriptions, because so few people can agree what it means, and because it doesn't adequately represent the community they're presenting. There is a lot of truth in that, but at the same time, there is a large community built around the commemoration of traditional song and dance.
This piece in the Globe suggests:
Examining why these low-key, non-star-driven festivals do well, when the pop industry is in historic decline, reveals how completely folk music exists within its own economy, with vastly different business models for presenters and career models for performers.Indeed, I believe it's the very reason that folk music—the term and the art forms to which it refers—fluctuates in popularity and practice. I talk to artists all the time who believe the decline of the recording industry isn't having any supreme affect on their ability to get gigs in the folk world. There is a blanket resiliency in the folk music community—perhaps because the music and traditions have had to stay alive so long, at this point the only option is to thrive. Still, it's nice to see major papers talking about how well folk music festivals are doing.