THE news that Glasgow was to host a new festival devoted to traditional and Celtic music was greeted with an air of pessimism.

Back then, many people had a jaundiced view of the folk music scene. Previewing the inaugural Celtic Connections festival in 1992, one lazy Scottish broadsheet journalist warned readers to "expect a room full of bearded, cardigan-wearing blokes with banjos". But there were also plenty of raised eyebrows among the folk fraternity, who questioned the wisdom of the idea that singers normally found in smoky pub back-rooms and folk clubs could be elevated to the more lofty setting of the Royal Concert Hall. And in January. Really?

Two decades on from that first year of a dozen concerts, Celtic Connections has grown into one of the biggest and most diverse festivals of its kind worldwide. Meanwhile, the perception of traditional music has changed beyond recognition. Where once there was masked ridicule, now there is love and respect from a new generation whose affection for their country's culture is reminiscent of the revelation that comes when you first realise that, actually, your parents are pretty great people.

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How did this happen? In the 1980s, when I was finding my way around an accordion à la Jimmy Shand, the instrument was decidedly uncool and my burgeoning obsession with traditional music was not something I could shout from the rooftops. Instead, it was a covert operation, which involved trying to hide the instrument while lugging it in to school.

I have my parents to thank for instilling my early fascination for traditional music. Growing up in Taynuilt, Argyll, our house was a kind of 24-hour drop-in ceilidh, hosted by my accordion-playing dad and piano-playing mum, with my three sisters joining in on fiddles and pipe. And when there wasn't a tune happening in the kitchen, there was usually one playing on the radio. BBC Radio nan Gaidheil was like a window to the traditional music world to me. It's where I first heard bands such as The Bothy Band and Planxty from Ireland, as well as home-grown "exotic" bands such as Ossian, Silly Wizard and Boys Of The Lough.

All the same, it was with some reluctance that, aged 12, I first picked up an accordion. After all, my dad played the instrument. But I quickly discovered that I loved it. I began receiving lessons from a great local player, Neil Sinclair, and I would practise for hours after school, learning tunes from records of Scottish dance bands and, later, folk albums.

As for any uncoolness that might have been associated with the accordion, well, there's nothing like being the brunt of jokes and insults to get you practising harder. By the time I was 14, I was playing in my dad's ceilidh band and learning tunes from him and the band's fiddle player, Calum MacPhail.

Around that time, I was getting into classical music at school and I was encouraged to take lessons from a "serious" accordion teacher, so every Friday lunchtime, my mum would pick me up from Oban High School and drive me to Perth (a two-hour trip) for a lesson with the world-class player Sylvia Wilson. That was parental dedication. For three years, I studied classical accordion (mostly adaptions of Paganini, Bach and mysterious Russian composers), and at 16, I won the All Britain Accordion Championships solo award.

For a while, I considered studying classical music, but my heart was stolen by folk. While still at school, a bunch of friends formed the band Capercaillie. Our passion was for Gaelic song: a musical form that is in keeping with many folk traditions. The songs may be appear simple on the surface, but dig deep enough and you'll find a complex web of rhythmic accents. In fact, Hebridean Gaelic work songs have a rhythmic style that is completely unique among European music traditions, and its melodies are the envy of the world. But although that opened up limitless possibilities for arrangements and adaptations, any experimentation we did was tempered by looking over our shoulders at what the generation before had expected. We were always stepping back from the brink of potential cultural vandalism. Maybe it was all in the mind, but it seemed as if purists were the cloaked elders watching over the church of traditional music.

Ironically, it was probably the emergence of musicians who felt no weight of expectation to adhere to any musical rule book that kick-started a new attitude from audiences towards the music. In some cases you could point to musicians and bands, such as trippy fusionists Shooglenifty, who found a way of making Highland fiddle tunes sound like they belonged to James Brown, and of course the sorely missed Martyn Bennett – a fiercely talented, dreadlocked young man who pioneered the unlikely but exhilarating mix of bagpipes and club beats. His peak in live performance terms was probably the day he brought T In The Park's crowd to a frenzy – ironically, in the same year that Celtic Connections began.

Already, the image of traditional music was changing, and today it is enjoying a full-blown renaissance – to the extent that in some Scottish schools now, you are considered slightly strange if you don't march through the gates with an accordion, fiddle or clarsach under your arm. Partly that is about the changing face of the way the music has been presented. Swapping white heather and kilts for Doc Martens and T-shirts has helped, as has the way the music itself has loosened some of its shackles. Celtic Connections has been at the heart of that process.

When asked to explain the difference between the way fiddle tunes were played in Scotland and the way American bluegrass musicians played them, Tim O'Brien (one of Nashville's most inspiring purveyors of old and new songs) said "we are all at the top of the same mountain, but looking in different directions". He means this in a good way, of course, but it seems like that analogy could be used to explain Scotland's cultural landscape until fairly recently as well.

In other words, it's not the music that has changed. Some of the melodies played today are four centuries old. The music, which was always cool, just began to be heard by the right people at the right time and in the right place. And this was happening up and down the country thanks to musicians who were brought up immersed in traditional music, but who were not deaf to all the other forms of "popular" music riding the airwaves.

FROM the outset, the ethos of Celtic Connections was to offer the biggest stage slots to musicians who might be brave enough to put aside their staple touring show and instead create unique and one-off collaborations. Headline artists began to arrive at the festival, leave their egos at the airport and engage with the defining character of Celtic music traditions – heart, soul and spontaneity. Well in excess of a million people have now experienced the festival, and in doing so, they have witnessed the development of brand new musical bonds.

These days, folk is appreciated by musicians from many different genres, and it is also being given a broad platform within the British media. Within the last few weeks, the Scots folk trio Lau have appeared on the BBC flagship music show Later ... with Jools Holland, as has new folk singer-songwriter Sam Carter. In addition, this year's Mercury awards nominated folk singer/collector Sam Lee for his beautiful album Ground Of Its Own (an album, incidentally, that has at its heart songs collected by the great Aberdeen-born travelling singer Stanley Robertson).

There's a part in Kirsty Gunn's epic novel The Big Music that talks up the idea of "returning" in music: "Everything about the music of the piobaireachd indicates a turning back to its origins." Piobaireachd is the highest form of piping (almost like the classical music of piping). There is a theme (called the ground) and then variations returning back to the theme.

But that statement about the piobaireachd is true for much of the music celebrated at Celtic Connections. Sometimes it seems through all the fiddle and pipe tunes, Scots and Irish songs, Gaelic airs, ballads, old-time Americana, African ngoni blues, Indian ragas and so on, there must be one simple little melody that all performers are trying to return to. Like the ground of a piobaireachd.

The source of this new-found confidence and appreciation of our own country's traditional music can be traced, at least in part, to work at a grassroots level in schools and workshops across Scotland, and in particular the Feisean movement. The "micro festival" format of the Feis (a traditional Gaelic arts and culture festival) has transformed children with little more than a second-hand instrument and a gentle family push into stars of festivals like Celtic Connections today. This movement has flourished because of the constant stream of passion and experience passed on by a community of mentors who understand the power of music to build a community and satisfy the soul. Their biggest achievement may very well be sending these young people away from the classroom with tunes buzzing in their heads and a swollen sense of pride. For any culture to flourish, surely pride is the key.

Although Celtic Connections has become for many artists a vehicle for musical aspirations, collaborations and journeys into the unknown, over the past few years there has been an incredible sense of jostling for a good place at the table to survive in a crowded live scene. This is especially true given that the record industry is on its knees. For many emerging bands, "on the road" albums have become little more than musical business cards we shoot out into the abyss of the industry in the hope it catches someone's attention.

There is, however, a way artists standing on the hard shoulder of the mainstream music industry could potentially afford to make quality recordings that matter, and it is through Creative Scotland. It's true that, of late, the arts body has been soaking up the punches from artists who are unhappy with some of its policies. However, very few of those detractors are from the field of music-making. After all, last year the national arts body facilitated the release of more than 60 albums by Scottish artists, including folk, jazz and indie musicians – many of them at the cutting edge. Creative Scotland assisted in the studio and musician costs of some great records that would otherwise have struggled to be realised, given the dire state of the commercial record industry.

So this raises the question: why not go the whole way and have a nationalised Scottish record label? Given that Creative Scotland is already making contributions that help individual bands and artists to make albums, surely it could build on this success and take on the manufacture, distribution, marketing and product management costs? Successful releases would then enable re-investment back into the "label".

For now, however, the big record companies (or what's left of them) are locked in a frenzied bidding war to sign one hipper-than-hip Mumford & Sons-inspired indie band from Glasgow. Last week, I was persuaded to check out their gig. I couldn't help noticing that the room was full of bearded, cardigan-wearing types nodding along to the banjo-led strains of those angsty songs.

It just goes to show – folkies are always ahead of the times.