The irony of the situation is that it's unprofitable to license anime for the US precisely because the fansubbing community already distributes "free" copies, and most anime-fans consume the majority of their content that way.
What's even more ironic, is that no one is willing to pay for poor quality subtitles, which is frequently the case with the ones provided by companies.
...which is precisely what is meant when one says "there's no market for this". At this point, content owners have the choice of either being permissive, or clamping down on the community using IP laws.
The interesting part is they could just donate a generous amount to the community in exchange for the use of their translations in the "official" release.
It's a win-win from what i see it.
Community gets funding they don't have to pay for another translation and make a little more profit.
The thing is, the fansubbed product is better. The user experience is as good as with Kindle books, and better than any commercial video service - the translation quality of modern internet streaming services like Crunchyroll is actually good enough to compete with fansubs. But the video quality isn't, and I can't stream on my commute.
For those not in the know, the difference is incredible. Contrast a DVD release with crappy bitmapped, two-colour subtitles with interlaced video to a file with nice anti-aliased subs, often more contextual information/better translations, and in a small file size (thanks to a modern codec[1]) and a mobile-device-ready format to boot. There really is no contest.
To put it another way, it wouldn't surprise me if many people end up watching fansubbed versions of shows they already own just because it's better and more convenient.
[1]For proof of this just see VLC's release notes for all the improvements we have thanks to anime fans pushing adoption of modern technologies.
I know many anime fans who have rows of shrinkwrapped DVDs on their walls - they'll buy them to support the creators, but the fansub quality is much better.
Well, no. Fansubs are usually very poor quality translation. Not only do hey leave English mistakes in the subs, but they leave half of the stuff in Japanese (chan, sempai, sensei, etc.) because those are words their audience understand anyway.
Well, sorry but "sensei" just means "doctor", "professor" or "teacher" depending on the context, it's not some mysterious magic title that can't be translated.
Translation is hard. Honorifics end up being a place where fansubbers just give up.
On the other hand, consider a series in which character A calls character B "B kun" while character C calls character B "B sempai".
Most of the time it doesn't matter enough to try and bother with a good way of translating that, but sometimes it comes up in the plot, perhaps several episodes into the show.
Choosing to leave those untranslated isn't anything new, nor unique to fansubs. The Early '90s AnimeEigo translation of the Aa! Megamisamaa OVA left them untranslated in some cases, with a note on the top of the screen.
Yes, fansubs could use better copy-editing, but so could some professional subs. The biggeset offender is that I have seen several instances of English loan-words left in their rÅmaji spelling rather than their proper English spellings in commercial subtitles.
Some of the higher production value translations will go for a very literal subtitle translation and a highly figurative dub translation. An example of this is the "Tenchi Forever" restaurant scene translation where The dub is roughly:
Waiter: "Would you like coffee after your meal?"
Diner: "No"
and the subtitle is
Waiter: "Would you like tea with that"
Diner: "Yes"
(That one particularly sticks out in my mind since if you watch with sub+dub at the same time you have someone speaking "no" with a subtitle of "yes")
Idunno, sometimes the translations do lose some context. I've lost interest in anime since then, but when I was younger I saw a fansub of Princess Mononoke before I saw the official sub... and yeah, leaving some of the monster's names untranslated made more sense. Calling the creatures the Deer God and the Demon instead of Tatagami and Shishigami created a bunch of connotative problems. AFAIK, those aren't even real words in Japanese, so translating them wasn't necessary - they were names, titles, not things needing translating. By translating Tatagami into "demon" they created the impression that the beast was evil instead of angry and cursed. By calling the Shishigami the "Deer God" it created the impression that it was the god of the Deer instead of the god of the forest itself.
The folks watching it with me found the Disney sub confusing when I had no trouble keeping up with the original.
So there's a balancing act, and I'll agree that otakus are too quick to leave stuff untranslated, commercial translators are too agressive at picking a word that doesn't fit.
I disagree. If the legitimate source becomes easier to acquire, people will migrate. For example, I always youtubed/torrented music. I finally got Spotify and it completely replaced it because it's easier to access. Sure I'm "losing" $10 per month that I could otherwise save, but this service does everything for me. Indexing, discovery, and syncing.