I may have misinterpreted your post, but you seemed to have a near gleeful indifference at the (supposedly) pending demise of opera. It just seemed so strange to me that one wouldn't care (and even exhibit a certain glee) about the demise of something that is so deeply important to many people, past and present.
I'm making this argument on principle (and note that in consideration of people who enjoy opera, I wrote the part in bold below).
Fair enough, but with opera in particular, I think there's no other issue as big as how they can survive in a financial sense. Honestly, with the enormous overheads they have, I think that categorising is superfluous.
If we where back in the day of Mahler and Richard Strauss, who said Lehar was basically rubbish, there wouldn't be opera anymore. Not that I particularly care about opera, but there are many others who do. So I'm saying these changes are probably inevitable, and necessary for its survival.
I am aware of treading on thin ice by saying this on a classical forum, but my main point was about how without change, opera can die.
As an opera lover myself, I have no issues with opera theatres being used for musicals and don't really see why anyone would. No one is claiming musicals are operas or vice-versa, or that they offer the same kind of artistic experience (I think one of the chief problems with modern enjoyment of operas is that people approach them expecting a sort of musical just with classical music).
Fair enough, and my point is that it doesn't really matter how we categorise what is performed there.
As a historical note, I think it is a bit inaccurate to say that folk music turned into popular music. Folk music was often (not always) performed by amateur musicians to people with little to no money. Popular music relies on the middle class created by industrialisation; it is performed by professional musicians to many people who are paying decent money. Before industrialization, the average joe simply didn't have the sort of money to make "pop music" a reality. Pop music, although it can trace its origins back a bit farther, is really a post-war phenomenon.
This isn't my conversation, science will probably give his own reply, but I'll chime in briefly.
I think an important aspect is dissemination, especially how music came into ordinary people's homes.
In the 19th century, you had more people being able to afford music lessons, the development of market for printed sheet music and mass production of instruments, especially upright pianos.
I see the 20th century equivalent of this to be the development of recording technology.