This is a great question. Barre Toelken was a thoughtful observer of all things "folklore," and I think his optimistic prediction is largely fair. Largely. There are some caveats I am inclined to suggest.

First to make it clear to those who might read further: folklore is both a subject and a field of study: for clarity – let's use "folklore" for what people have and "folkloristics" for the study of folklore. Few can agree on the exact definition of the term folklore, but it is generally regarded as an aspect (or function) of culture that includes oral narratives, folkways, folklife, etc. (understanding that each of those terms have disputed definitions).

Toelken's prediction that the Internet would not mean the death of folklore (i.e., the aspect of culture) has proved accurate, but he could not imagine exactly how that would unfold. He likened the Internet to a published broadsheet – a place where one could read what was floating around orally as folklore. What has unfolded is that the Internet has become a public forum where folklore is expressed. Without the Internet, we would not have the meme. True, the meme has its print predecessor, but it is a new species that is now entirely dependent on the Internet – and that's just one example.

As long as there are people, we will have folklore, and it will continue to unfold in new and surprising ways. In the late twentieth century, many older folklorists were concerned that the era of "salvage folkloristics" – the gathering of folklore that was becoming extinct was coming to an end. Modernization/industrialization certainly accelerated culture change, and the old ways really seemed to be dying. Many aspects of older folklore did disappear, but others took their place. We now see that folklore had always changed and will always continue to do so.

So that's the answer to the first half of the question: folklore is alive and well and is thriving in its new twenty-first-century setting.

Folkloristics is another matter. As a field of study, folkloristics has always found it hard to find a home and a satisfactory niche. Unlike history, psychology, ethnography, archaeology, and even sociology, folklore is not as frequently represented with a distinct department at universities – indeed, such departments are rare. Consequently, people of diverse backgrounds and training teach the subject at many universities, and their students feel they have "studied folklore," even when graduates of the rare departments might not see it that way.

More importantly, after WWII, there was a tendency for folklore departments and their graduates to rethink their mission and their discipline. The old approach was often seen as something that had encouraged the nationalism that was internationally disastrous in the hands of the Nazis. This wasn't the only factor, but it was an important one. The idea of studying old forms of oral tradition (and other aspects of folklore) was often abandoned by the discipline, which turned instead to the contemporary.

The old Finnish Historic Geographic Method (which balanced both history and geography) was (and is) still embraced by many European folklorists, but in many universities, it yielded to a new generation that was only interested in the contemporary. This younger generation tended (and tends) to look at anyone studying historic forms of folklore as removed from the "true" discipline of folkloristics. Toelken's optimism that the discipline would survive is fair. It has proven to be accurate, but there are problems that many within the "folkloristic silo" may not perceive.

For decades before WWII, folkloristics could be regarded as a conglomeration of academics trained in the field and popular enthusiasts who gathered material and contributed to the effort, retaining membership in scholarly organizations and adding to archived collections. The "many paths to folklore" were honored by all participants, allowing even kindred academics - historians, linguists, and literary studies professors – to participate. Folkloristics has followed the trend in other fields by being increasingly siloed – distinct bibliographies, jargon, publications, etc., make it difficult for those outside the discipline to communicate, share, or contribute when not accepted as part of the "in" group.

All disciplines suffer as this happens, but folkloristics is particularly vulnerable because of the problem I described early on about not achieving the "critical mass" to form a clearly defined discipline at most universities. Even more of a problem, because folkloristics has drifted more to the contemporary and shunned the historic, the discipline has tended to cut itself off from what the "folk" want: all one need do is to look at the various subreddits that address the subject of folklore, even beyond this one: the overwhelming number of questions coming from regular people is about past forms of folklore. The folk are no longer as interested in what folkloristics does.

For decades, folklorists studied exactly what the folk wanted to know: ancient mythologies and past ways of life, together with the stories that people told. By shifting largely to the contemporary, folklorists are in danger of cutting themselves off from support from the very folk they study. That's not to say that there isn't a market for what they do, but it is a harder "sell." In an academic world that has changed "publish or perish" to "public or perish" folkloristics could be in danger.

But that's only my opinion, and in the eyes of many younger folklorists, I'm from a previous century and my opinion doesn't count!