I know 2 people IRL who make hundreds of dollars a month writing MHA smut fanfiction. What is your opinion on people who ARE profiting from the matter? You don't even have to look far to find fanfictions that have patreons or paypal donations. They are profiting from it.
Your argument that "some people" aren't profiting some of the time isn't a foundational argument, since there are obvious counter examples that you don't acknowledge, you just ignore.
I dislike it for 2 fundamental reasons, and 1 personal one. There is a caveat for stories where the author encourages fanfictions of their work, but having that option is a privilege only the author can give.
1. It misrepresents the fanfiction author's skill in a public setting. They are piggybacking on other works. The chinese do this with all kinds of products, making cheap knock offs and selling it as the real thing off the brand recognition. It is duplicitous. Even if you know it's a knockoff our brains aren't actually good at quarantining that knowledge, and it subconsciously bleeds in, ruining our image of the original product.
2. Public domain, fair use, and parody exist. The rest of society has agreed on those being the limits on what you can and cannot creatively take and use. Even then the lawsuits roll out and people fight over what is or is not fair use or parody. Change the law if you want it to be fair use, it currently isn't.
My personal reason is that many fanfiction authors that get any traction usually end up being an asshole. They talk big game, and start complaining about the various rules they said they didn't care about before, like being able to profit from "their work". Often time they'll take people's money on commissioned works. Ultimately many come off as whiny communists who want other people's labor, then when they get some of it, are suddenly anarcho capitalists who don't believe laws regulating profit should exist.
Muh community "needs" my fanfiction. The internet is a public square, not a quiet room in your house. Every website is just a part of the massive public square, and there are search engines to let you find anything quickly in it. That fanfiction, essentially, is like standing outside a line at a movie theater and selling or giving away your fanfiction of the movie to people going in to see or are just leaving after having seen it. It isn't sharing it with a few friends. For a small TV show or manga, if your fanfiction gets big enough, it could show up on the first page of google, and that would easily confuse people.
There are four main characteristics that can be seen in fans: investment, discrimination, productivity, and community.
1. A fan has an emotional attachment to the object of adoration. He may spend significantly more money, time, and energy on this object, for which he often feels a sense of "ownership" that separates a fan from a regular consumer. He, for example, would react strongly if something happened to their adoration they deemed to be wrong, e.g., cutting funding for his favorite franchise.
2. Fans differentiate strongly between objects of which they are fans and objects of which they are not. This also serves to build a community, establishing a boundary between fans and the "rest of the world." Discrimination also exists among fans in the form of "favorite actors, games, characters, shows, etc.," an accumulation of canon knowledge (elitism), opinions, and interpretations.
3. Fans take pleasure in manipulating and interpreting the meaning of objects they consume. Although the original ideas of producers may differ, this is not because of faultiness but rather for the appropriation of it. Gossips, discussions, and derivative works—fanart, fan-games, and fanfiction—are some great examples of fan productivity.
4. Fans want to talk to and share their adoration with like-minded individuals to heighten the pleasure.
Why am I telling you this? The fact that fanworks play an important part in keeping a fandom alive is a good reason for me to disagree with you. Virtually any discussion can and will poison your interpretation of the original work, but that doesn't mean we should stop doing it altogether. No, that is just silly.
Recently, I was reading about the early days of the yuri before it became an established genre. Suffice to say, derivative works played a huge role in establishing what we know to be yuri, with one survey claiming that more people read and have been introduced to the genre through derivative work than its original counterpart; the doujin artists themselves becoming yuri mangaka afterwards. Notably, Yuri Hime employed a similar strategy of fan interpretation to engage mainstream consumers and ensure the genre's continuity through the anime adaptation of 'Yuru Yuri.'
Then there is fan-driven community like Touhou. The official content for the franchise is extremely small compared to what the community has to offer, and that is the beauty of it; there is a reason why such niche games has such a longstanding and strong fan base.
People profiting of other's work is a valid concern, and I share that too. But I personally don't think it is part of the conversation here. On the note, calling fanfictions to be creatively bankrupt is a weird take. Because, going by what I've explained so far, fanfictions are not a show of creative expression but of a fan's pleasure in twisting the original meaning to his liking.