Sooo....not a conscious effort by the "establishment" to "normalize" things and get back to the business of stealing from the poor, soaking it up by the rich?
Maybe not.
But that famous 1971 memo from Supreme Court Justice Lewis Powell to the U.S. Chamber of Commerce comes to mind.
He urged the right-wing to forge what Hillary would later call a "vast conspiracy" to form think tanks, legal foundations, campus organizations, etc., to stop liberalism in its tracks and reverse many New Deal policies, laws, legal decisions, etc.
It called for infiltrating and eventually taking over the media, arts and entertainment, as well as other opinion-making institutions.
While some have downplayed the actual influence of the memo, it does seem eerily prescient of what either has already happened or is in the process of happening.
Most recently, the end of net neutrality has already resulted in a drastic change in the internet, with more tightening down to certainly come.
In fact, I predict sites like Agnostics may soon be a thing of the past, shut down completely or rendered virtually inaccessible.
So it doesn't seem a stretch to me that the end of the pre-eminence of folk and rock espousing countercultural ideals was one of the early casualties of what would later to known as the "culture wars."
Who says the people who now control the airwaves (like Clear Channel) didn't back then make a deliberate and concerted effort to steer the music industry away from movement politics by creating a new fad to take its place (sort of like the Romans creating Christianity to replace Judaiism, lol).
Voila, Disco!

Protest music mutates with the times - folk, punk, reggae, grindcore, industrial, blues, and yes, even disco have had elements of protest/rebellion/politics embedded in them.

Green Day's "Heart Like A Hand Grenade" (a.k.a. American Idiot album) is the G W Bush era protest album.

Protest music hasn't died, it's just evolving.

Marilyn Manson's early music was nothing but protest music

I think it was more so altered than died out. With the end of the war, Americans focused on civil rights and the role of democracy. Look at songs like “Born in the USA” with the lyrics being both literally and figuratively drowned out by the massive noise around him.

A little bit of both. The Vietnam war ended, so there wasn’t anything up front and high profile in the daily news to protest anymore.

But once the corporations completely took over pop and rock radio and homogenized it to the point where even the most minuscule spark of originality in mainstream top 40 and rock was stamped out, it was dead anyway.

Except for on independent college and underground radio stations. And just when you think that mainstream radio and mainstream performers can’t possibly lower the bar farther and get any more bland, they somehow find a way to make it happen.

One really needs to look to independent and online radio to find anything new worth listening to.

I would suggest that most of the protagonists of that period, once their fight was finished, moved into suburban, middle class, safe careers and fell asleep!

The lyrics of this song Hip To Be Square by Huey Lewis and The News tells it quite well.

Music styles rise and fall rhythmically. No, I'm not making a joke. Every generation has a profound effect on cultural accoutrements. Within each profound change, smaller internal variations occur. In the case of wars and other social upheavals, emotional elements of the fray insert themselves into whatever the form was prior to the disturbance and change the color/mood, but not the foundation. So far, the only moderately homogeneous and long-lived form of musical expression in various cultures is their brand of what we casually lump into the folk music cauldron.

Almost all forms of expressive art follow similar changes. Some not quite so quickly as music because of the medium and audience.

All of the above.
Also, you could add the realization, that as the young people of that era started getting older and having children, they had very practical considerations which
were taking precedence over their ideals.
It's hard to attend protest marches when you can't just take off from work, or get
a sitter for your kids.
A lot of them simply got sucked into the system and couldn't remain activists and
gadflies.