First off, let me say that I in no way advocate piracy. Second, let me say, people download translated anime and manga for free because there is no viable legitimate way to pay for it until two or more years later after the show has run. Unfortunately what ends up happening is the shows are horribly butchered and dubbed (shows that were never meant for children are sanitized for an American children) and the results are almost unwatchable.
Part 1 — How do anime fansubs get made and the people who consume it
I don’t have deep insight into production of anime fansubs, but to loosely summarize the process:
1. A group of enthusiasts meet either in real life or via the Internet and decide they are going to fansub a show.
2. Either someone from the group or someone else downloads a raw feed of the show.
b. Raw providers encode the shows to .avi, .mkv, or .ram (or others) formats and make them available via bittorrent, direct download, or through IRC
3. The groups usually consist of 3 or more people — a translator, an editor, a timer, a typesetter, and a project manager (although, this person may be called many things)
4. They embedded the subtitles and depending on the file format, the subtitles may become one with the video or they may be embedded a separate track that overlays the video image
5. The finished videos are put out into the world as .avi, mkv, or .ram (or others) and are made available via bittorrent, direct download, or through IRC (all of this they do without getting paid)
6. Aggregator websites posts the different shows. Some sites may provide download statistics.
An example of a very good anime fansubber group is Shinsen Subs. If they sub a show, it’s likely that it’s a show that I will like. They seems to have a good feel for what’s appealing to adults. Some aggregators I use are Baka-Updates and Download Anime. Many of the fansubber sites and the aggregator sites support strong and large communities of anime and manga lovers. These people also are heavily into console and PC gaming. The population is mostly male (~60% self reported) ranging in age from ~11 – 50-years old, with most people in their late teens and early 20’s. These folks are tech savvy (early adopters) and buy lots of tech products. Also, there’s a split in the population in which that there are lots of poor students (spending parents’ cash) and lots of childless young adults flush with cash. To me this sounds like the demographic every consumer electronics company is after. Perhaps we should get to know this community better.
Anyhow, I suggest browsing through some of the forums, paying particular attention to some of the results of the surveys on Baka-Updates and their sister manga site. Also look at the statistics on the bittorrent tracker pages to understand the volume of Internet traffic and the number of people who are not being served with a legitimate way to get their entertainment.
Next, in Part 2 — Downloading anime and manga