Starmaker: I'm fine with unauthorized stories, but the byproduct of "fandom" is shit. A good unauthorized story wouldn't be classified as fanfiction; it will be copyright infringement and the execs will stand up and notice.
Fenixp: Huh? Sooo your point is that there are no good fanfic stories because they would get sued? Or that the proof of fanfic being non-existent is that there are no lawsuits on fans writing stories?
It's twofold.
"Things" exist. Saying that if we can't be bothered to place an Aristotelian border between two categories, then the categories do not exist and everything is the same, is extremely unproductive.
What fandom generates for its own internal consumption has an extremely high likelihood of being shit. 100% if it's written for an even smaller "community" of other fanfiction writers. Conversely, the more the work is aimed at the general audience outside the "fandom", the more likely it is to be good, up to the maximum chance of 10% (Sturgeon's law). It transcends the requirements of fandom specialty interest (when you need to be familiar with other works of art to know who Sonic and Pikachu are and why it's so heartwarming that they're screwing each other) and becomes an independent product that can compete with official offerings on the open market.
Legtal problems is not a requirement, it's a criterion for me personally. Fantasy Flight Games released a custom Arkham Horror card generator to the public, to be used in making new cards for game mods. And then they slapped a mod author with a cease and desist for
using copyrighted card layouts, because the mod was better than Arkham Horror itself. The C&D didn't retroactively make the mod even better - but if I hadn't been aware of it, it'd have made me pay attention.