The ethics of fansubbing can be summed up with this: for fans, by fans. Subtitling anime that would otherwise be unobtainable within the domestic market, simply because it's unobtainable (and usually deserving a few thousand extra fans).
Fan-subtitled anime has long been both a problem and a blessing to anime fans in the United States and other non-Asian countries. Most fans support fansubbing of currently unlicensed/undomesticated anime, some think it's a plague, and some won't say either way, but everyone is always a bit nervous about the legalities behind it.
Here's how it works: the domestic distributors (AD Vision, Viz, Manga Video, AnimeVillage.Com, etc.) choose what shows they will license based on popularity and profitability. However, some shows will never be popular or profitable, so they will theoretically never be brought over and subtitled (or dubbed, but noone wants that).
So a few of the more serious fans buy the Japanese laserdiscs or DVDs of the show. After watching it (either with an understanding of the language or a set of scripts), they think (like all otaku after seeing a new show), "oh my god, everyone needs to see this!" So they either put their translation down to a script or use an already available script, and start subtitling it.
The subtitling process is done usually by a computer (traditionally an Amiga) with a genlock card and a program such as JACOSub or Sub Station Alpha, or a digital captioning program like Virtual Dub's SSA filter. Once the subtitling is complete, they copy it to a high-quality VHS tape (or upload somewhere, if digital) and send it out to fansub distros for everyone to latch on to and love.
There is no law supporting anyone doing this without obtaining the license for it, only laws to prevent it. But since no other company will purchase a license, and since fansubs generate a significant amount of publicity for the anime, the fansubbers are usually ignored by both the Japanese and domestic anime companies. This is the nasty gray area of legality where fansubs live.
Fan subtitling has become quite popular in the States, though, and it's become almost a competition for fansub groups to see if they can get a title out before it's licensed, whether it will likely be licensed or not. Also, some crews go ahead and sub licensed anime just because they don't like the license holder's translation. This almost never ends up in a lawsuit, but it does usually involve a harsh slap on the wrist and a lot of flaming and new-found disrespect for the fansub group and it's distributors (from the fansub community).
Back when it was still new, circa Marmalade Boy, there was almost no discussion amongst the domestic companies to try and stop fansubbing. Quite a few employees of those companies were fans of Marmalade Boy and happy that someone was able to get it out for others to enjoy. But now...
The problem with fansubs and why they will fail:
- Anime is no longer just entertainment for nerds.
Anime is becoming accepted by the public (save for the Christian Right and other ultra-conservatives). Pokemon, Sailor Moon, Card Captor Sakura, Gundam Wing, Tenchi Muyo, Vision of Escaflowne, and other shows all made it onto U.S. TV, cable and network. As anime grows, so will the fansub world. The fansubs will be more noticeable, and the fansub crews will grow. More fansubbers = more unethical fansubbers, as a rule. And we'll all be swimming in lawsuits if something worse doesn't happen first.
- Fansub groups are pushing their limits.
Most current fansub groups like Kodocha Anime are still playing by the rules, pulling titles when they're licensed, and not actively pursuing titles that will obviously get licensed soon. But some groups (often consisting of overly-competitive boys who think they can make a name for themselves, or even a few bucks) push too far. Even though "The Slayers" has been out for a while, people still fansubbed the sequel series, Slayers Next and Slayers Try. Obviously they would be licensed, but they subbed it anyway. And a few (very few, but still more than one) distributors, even though both Next and Try are now out, still distribute the shows like nothing's wrong. This is against everything fansubs originally stood for, and most purists (some holier than thou than others) are waiting patiently to see these distros try to run their operation from a prison cell (eheh... ^_^;).
- Digital distribution doesn't play by the same rules.
Digital fansub distribution is becoming possible, saving the cost of SASEs and videotape. We download episodes (between 35-100 MB per half-hour, usually) through online distros (FTP servers, Hotline servers, etc.). A nice evolutionary step for fansub distribution. But the problem is that it's treated like warez sometimes. Websites with encoded copies of the licensed version of Aa! Megamisama or Neon Genesis Evangelion are everywhere. These titles have been around for years in the States, but kids are Napstering them to anyone with a modem. And IRC distros are worse, distributing as many licensed series as possible in hopes of collecting others.
The warez-style distributors are almost never related in any way to the fansub-style distributors, but the anime industry won't be seeing the difference. They'll use it to stop both. I personally know of one domestic company that's already gathering evidence by infiltrating the IRC channels and playing stupid-fanboy.
On top of that, there is usually no effort made to control *who* the fansubs go to. One of the "rules" of fansubs is that you can't distribute stuff back to Japan. That immediately cuts out the production and distribution system there. Still, check the logs from a fansub FTP and there'll probably be IP addresses from Japan. Just hope it's not from sunrise.co.jp (a big production studio) or the like.
Fansubs are being auctioned on eBay and other online auction sites for profit. This is no better than those who sell Son May CDs and Korean/Chinese subtitled anime VCDs through the same. It's just as illegal (not entirely, but enough), misleading, and the worst thing that could happen to fansubs. And it's some pathetic little trickass kid thinking he's got some right to profit from it. I'd like a job as a hitman for such people, especially after seeing my hours of translation-hell being sold for $50 each.
- Cutting out the middleman
Studio Gainax's new series FLCL (Furikuri) is just now coming out on DVD. And it's already subtitled in English. This means no fansubber should touch it, it's already the English-language release. And it's selling like hotcakes, a big portion directly to the States. Without the need for fansubs, there won't be any. This is the smartest move Gainax could ever make. They can directly profit from selling FLCL DVDs to both Japanese- and English- speaking fans. Licensing would be quick, since there won't be a need for a translator or anything much outside of repackaging. And, they keep their biggest fans (i.e. the ex-fansubbers) happy (must admit, they do know their market).
With a little push and some time, this could be the end of the fansub. And the best possible way to end the fansub wars, too: domestic distributors can still profit (and actually make their deadlines for once ^^;), the producers can profit even more, and the fansubbers aren't ostracized from anime or sent to court.
In closing - I'm a hypocrite. I'm active in the fansub world as both a collector and a (ex-)translator. But I'm also very much for seeing the anime industry survive. I fansub because I like anime and want to see it grow, so of course I'm not going to bite the hand that feeds (even though they charge me 6900Y per DVD o_O).
And even though fansubbing is illegal, I'll probably be there to see the chalk outline and still ask the recently deceased if they've got the next installment of Love Hina. If and when it does end up dying out, I want to see it killed by Gainax' way, calmly destroying the need for fansubs through pre-subtitling the work, instead of destroying the fansubbers. (And if they hired a certain ex-translator who's been waiting for a good reason to move to Japan...)
Don't misunderstand this as some elitist rant against domestic anime companies. Granted, there are plenty of them I won't touch for various reasons, but I also understand that they're constantly in a make or break situation, no matter how much Pokemon crap gets sold. They're doing it for money, nothing wrong with that. Sometimes quality gets sacrificed for the chance to keep their jobs, even then they try their hardest to get it right. Such is business in the anime industry. I wouldn't be able to make those deadlines with the level of quality they have.
Some info taken from www.fansubs.net and www.animeondvd.com and mashed through the horribly biased brain of a ranting fool.