Is the Fringe good or bad for NYC?

Yesterday, within a span of about an hour, I heard two conflicting reports on how the NYC Fringe Festival affects the city's off-off-Broadway and experimental theater scene. NY1's On Stage program had multiple interviews of theater professionals talking about how the Fringe is the only time in NYC when theaters can really put on a show for the love of the theatrical process more than for profit. An hour later, I see a Time Out New York feature which, in dissecting the problems of Manhattan's downtown theater scene, puts the blame squarely on the Fringe:

“Off-Off Broadway is now Philadelphia,” semi-jokes Ron Lasko, the Fringe’s publicist. While he says gentrification has done a lot of the damage, he admits the festival itself is also to blame. “It’s such a great financial bargain that many indie companies are quite content to produce their new work the Fringe [for a $550 fee] instead of seeking out costlier venues at other times,” he says. “When a showcase costs $20,000 to $40,000 to mount, there’s little room for experimentation.”

In reality, I think there's truth to both these statements. While we see more innovation per minute of stage time now than any other time in the New York season, maybe we should be spreading out that innovation more. I know Mike Daisey and Scott Walters would certainly say so, as this is a microcosm of their problems with the larger national scene in their mind. But at the same time, that may not make financial sense, as Don Hall would argue.

I'm a bit conflicted over this, as I feel the products that come out of the Fringe aren't as good as they're made out to be. Yes, the Fringe is more innovative and smaller, but that doesn't always mean better. There hasn't been a real Urinetown-level success in a long time, and I think that's more of a product of talent than of economics. NYC's Fringe pales in comparison to what's going on in Edinburgh right now. But is that the product of a flawed, fixable system or some other factors (creativity gaps, larger cultural trends, the limits of the medium). I don't think I have a firm opinion here. What about you guys?