Based on what won't happen in Newport, R.I., over Labor Day weekend, one might conclude that folk music is dead.

Producer Frank J. Russo attempted to bring the Newport Folk Festival back to the posh seaside community for the first time in 10 years, and the response has been, in his own words, "incredible."

Despite $20,000 worth of advertising in virtually every major newspaper in New England and New York and half a dozen radio stations, only 780 of the 25,000 tickets available for the three-day festival had been sold by the end of last week. Russo, who has had no prior connection with the folk festival, had no choice but to scrap the project.

"It's beyond my comprehension," Russo said yesterday from Rhode Island. "There has been more interest in the cancellation than in the event itself."

"Times have changed, I guess," he continued. "The kids who were in their early 20s 10 years ago now have families -- responsibilities, mortgages, car payments. The adult entertainment dollar is really tight now, and they just can't afford it. The 18-year-olds today were under 10 then. They never heard of Muddy Waters."

Russo, who owns the Providence-based Gemini Concerts Inc., is one of the major rock promoters in the New England area and has recently promoted concerts for the Allman brothers, Liza Minnelli, Frank Zappa and Diana Ross.

If the cancellation was a warning to promoters, it was a tragedy to the folk aficionados planning to go this year who had regarded a trip to the great folk festivals of the '60s in Newport like a pilgrimage to Mecca. Almost from the beginning the folk festival was outdrawing the earlier-established Newport Jazz Festival.

"It's really sad. I was planning to go," one New York fan said. "I had hoped that people would take another look at acoustic [non-electrified] music, given the blandness of a lot of the rock today.

"But the price of talent is so high today the kids are scraping their money together for major attractions," he continued. "None of the people who were to play at Newport have been promoted in years. And I guess there just aren't that many steadfast fans left."

The the generation weaned on Kiss and Peter Frampton, Russo's program apparently had little appeal. More important, the performers failed to draw the aging folk buffs out of nostalgia either.

Russo was planning to present the likes of Tom Rush, Buffy Sainte-Marie, Ramblin' Jack Elliott, Bob Gibson, Mary Travers and Peter Yarrow (of Peter, Paul and Mary), and John Hammond.

Following the format of the original 11 festivals, small afternoon workshops were to have been presented along with the evening concerts. Tickets ranged from $8.50 to $10.50 a day.

The paltry response to Russo's program is a far cry from the halcyon days of the '60s, when tens of thousands would invade the seaside town that had been a summer playground of America's millionaires for decades.

In 1968, over a five-day period, 73,000 fans packed Festival Field, where fishing nets used to be dried in the sun. Then 10 years old, the event had been transformed from a tribute to pure folk music, supported by intensely loyal and knowledgeable fans, to a crucible for a variety of musical genres, including rock.

It was in 1968, for example, that Janis Joplin set a single-night box-office record of $61,000.

Joplin's kind of music would have been unheard-of in 1959, when the town first echoed with the music of Odetta, Jean Ritchie, Sonnie Terry and Brownie McGhee, and the Kingston Trio. Serious folk historians like Alan Lomax held workshops, and none other than Studs Terkel acted as master of ceremonies.

The festival hit its stride with the backing of producer George Wein in 1963, when Bob Dylan, Joan Baez, July Collins, Pete Seeger, Doc Watson, Ian and Sylvia, Mississippi John Hurt, Dave van Ronk, and Peter, Paul and Mary, among countless other stars, created history together.

Tame by the standards of Woodstock and Altamont, thousands of young fans would arrive with sleeping bags and harmonicas for the afternoon workshops and evening concerts. Often, the Newport police would transport many of them to the local jail in school buses to sleep off the beer and get out of the rain. Nothing bad every seemed to happen.

Dylan made musical history in Newport in 1965 when he traded his blue work shirt for an orange-and-white polka-dot one and a black leather jacket, brought out an electric guitar to sing "It's All Over Now Baby Blue," and was roundly booed by the purists who came to hear him sing the more traditional songs like "Masters of War."

From then on, the programs at the folk festivals grew more eclectic. More electric music appeared, and more controversy followed. In 1969, the festival's final year in Newport, one of the ultimate rock 'n' roll groups of all time, Blind Faith, was to have played, but the Newport City Council canceled that part of the program.

Woodstock, it turned out, occurred a few weeks later.

Plans to hold a folk festival in 1971 were rejected by the Newport City Council after near-riots at the Jazz Festival that year. The last Newport Folk Festival was held in 1972 in New York City.