Folk music is a vexed term. Indeed, as the blues performer Big Bill Broonzy is credited often with saying, "All music is folk music, I ain't ever heard a horse sing." Very broadly, one might say it means either traditional music or popularizations of traditional music. Those who market music make little distinction between these two possibilities, so the consumer who says he likes folk music may be referring to any mixture of things. Originally folk music was much the same thing as what is now meant by "traditional music," i.e., the traditional music of particular ethnic groups learned by ear, that is, as part of an oral tradition, and played on acoustic instruments.
The English term folk, which gained usage in the 18th century to refer to peasants or non-literate peoples, derives from the German term Volk.
Generally speaking, there was a "folk revival" in the 1960s in Great Britain, Ireland, and America that built upon earlier collecting efforts. In the United States, in the 1930s and 40s, travelling performers such as Pete Seeger and Woody Guthrie both collected folk music and composed their own songs. This vein of music became popular in the United States during the 1950s, through singers like the Weavers--Seeger's group--and the Kingston Trio, who tried to reproduce and honor the work that had been collected in preceding decades. Meanwhile, in Ireland, the Clancy Brothers and Tommy Makem, The Dubliners, and The Chieftains, and a variety of other folk bands popularized Irish traditional music. These bands were rooted, to a greater or lesser extent, in a living tradition of Irish music, and they benefitted from collection efforts on the part of the likes of Seamus Ennis and Peter Kennedy, among others. We need more information here about folk revivals in other countries. Very definitely, it didn't just happen among liberal white Americans.
Some of this music had reference to political struggles of the past, and it seemed natural to such singers as Joan Baez, Woody Guthrie and Bob Dylan to draw on it as "protest music" as white support for the civil rights movement began to grow. Some began to write songs about current situations, using the instrumentations and stanza forms they took from the tradition.
When rock and roll stars and singer-songwriters began to sing traditional songs and play traditional tunes, this music, and the leading characteristics of the performance genre in which the music was made, were changed. For example, bass guitar and drum kit were often added to express and satisfy popular tastes; traditional melody and song were placed into arrangements that scarcely resembled their original sources.
As less traditional forms of folk music gained popularity, there grew to be a tension between so-called "purists" or "traditionalists" and the innovators. For example, traditionalists were indignant when Bob Dylan began to use an electric guitar.
Other examples of this transformation have occurred with bluegrass (a development of American old time music), which is often referred to as a kind of folk music, as well as with the use of traditional music in country music (itself a development of both bluegrass and old time music). On the other hand, since the 1970s a genre of "contemporary folk", fueled by new singer-songwriters, have continued to make the coffee-house circuit and keep the tradition of accoustic music alive. Such artists include John Prine, Cheryl Wheeler, Bill Morrisey, and Christine Lavin. Lavin in particular has become prominent as a leading promoter of this musical genre in recent years. Some, such as Lavin and Wheeler, inject a great deal of humor in their songs and performances, although much of their music is also deeply personal and sometimes satirical.
Traditional folk music forms were also merged with rock and roll to form the hybrid generally called called folk rock which included performers such as The Byrds, Simon and Garfunkel, The Mamas and the Papas, and many others. At the same time, a line of singers from Baez to Phil Ochs have continued to use traditional forms for original material. A similar stylistic shift, without using the "folk music" name, has occurred with the phenomenon of Celtic music, which in many cases is based on an amalgamation of Irish traditional music, Scottish traditional music, and other traditional musics associated with lands in which Celtic languages are or were spoken (regardless of any significant research showing that the musics have any genuine genetic relationship; so Breton music and Galician music are often included in the genre).