Hatcher examines the workings of the American anime industry, paying the most attention to the history and physical process of fansubbing. Fansubbing is the process by which fans take Japanese anime (taped from broadcast television or DVD/home video), translate it and edit the video to include their own subtitles. Fansubs used to be distributed on VHS either in stores or among fan clubs, but are now almost exclusively found online. Hatcher suggests that the anime industry, though it has unquestionably benefited from fansubbing and other forms of high-level fan involvement, is now "held hostage by the internet and their otaku-consumers." By now professional licensing and localization companies can do much of their own advertising and market research due to the growth and age of the domestic marketplace; yet such companies know that to crack down on the core loyal fans will almost certainly result in a huge backlash from those on whom they rely most. In contrast to common internet "pirates," fansubbing groups commit infringing acts in the open (as publicized on websites or individual named in credits attached to their work) and are confident in the moral high ground of their actions (if a work is not yet licensed in America, it is seen as "perfectly legal" to make it available in fansubbed form, for example-despite international copyright laws); the common conception of "anime fair use" makes many technically illegal uses practically immune to legal retaliation
The almost forced acceptance of the fan use of anime in America, in order to maintain loyalty and relevancy among fanbase, makes anime music videos relatively easy to allow for domestic copyright holders. A lawsuit that attacks a now established tradition within the community would alienate much of a company's fanbase, driving them to other sources-including illegal ones if nothing else is available. Given the companies' general tolerance of (or lack of legal action against) the availability of full episodes or movies online, music videos are a much easier sell as "advertisements" for their products as opposed to replacements or illegal derivative works. And given the industry's heavy stake in the convention scene, it is clear that the community aspect of anime fandom must be maintained and courted in order to stay viable.
Leonard's paper on American fans' use and distribution of anime goes into great depth on the legal issues raised, and often ignored, in regards to copyrighted works. The original Japanese copyright holders spurred on American fan-imports and fansubs by "abandoning" the market early on; in this way it was law-breaking American fans, clubs and conventions that created almost single-handedly what is now a visible and profitable market for the Japanese owners and the American licensors. Currently, though the Japanese owners do finally play in the American marketplace, they are nearly as willfully ignorant (in practice) of fan infringement than they were when America was still written off as an impossible market. But while first this ignorance was a result of their not thinking any American infringement could possibly hinder them financially, reasons for this now include the historical and continued support and "free publicity" for anime that American fans would not be so willing to embrace legitimately had it not gained buzz from prior illegal distribution among fan networks. Yet Leonard outlines all of the various ways that obtaining, translating, distributing and showing fansubs break any number of American and international copyright laws. Though fans often cite fair use as a defense for their actions (though a case has never been brought to court), Leonard dismisses all of the potential factors that would constitute fair use save for the "purpose and character" in the commerciality of fansubbing; in this case, fans often do their work for no profit and as a courtesy to fellow fans. In every other sense, their use is wholly unfair.
Here we see the rough legal guidelines that both Japanese and American anime copyright holders tend to adhere to when dealing with fans. In general, fan's use of anime is forgiven and often ignored, unless it exists in direct competition with legitimate localized releases. Anime Music Videos (not mentioned by Leonard) are another, altogether less potentially dangerous (than importing and fansubbing) form of "free advertising" for anime and of strengthening the fan networks that built and maintain the American anime audience. Again, Japanese copyright holders are shown to display a willful ignorance of American fans use for the most part.