You can draw fanart all day long and post it to the internet and enjoy your fandom to your heart’s content. When you draw a character that doesn’t belong to you and you didn’t have any part in designing it and you SELL that artwork without paying license fees to the original creator, it’s the…
Wondering then how every anime con in he known world hasn’t been shut down
Here’s the thing with Artist Alleys—at least the ones I’ve worked—derivative works are perfectly legal. While not all copyright holders are happy about it, there isn’t anything outright illegal about doing art on commission, featuring someone else’s characters, as long as you do the art from scratch and your art style is distinguishable from that of the source material. Doing fanart based on book or movie characters in anime style (which, frankly, is what most people at cons are doing) is different enough that most companies aren’t going to care, as long as the art isn’t mass-produced or offensive.
Copyright holders do have more room to claim infringement and sue the pants off you (or at least fine you) if your art is indistinguishable from theirs—like with My Little Pony vectors being turned into keychains or shirt decals. But the key thing there is that Hasbro already makes My Little Pony shirts, so you’re oftentimes cutting directly into their market and profits. (Whereas, say, Harry Potter chibis on a badge with your name on it is something Warner Bros isn’t offering for the movies anyway.)
You can face legal consequences if you’re making money off of someone else’s characters—Disney threatened to sue a daycare in Florida for unauthorized use of their characters in a mural, which imitated their art style, on the grounds that it implied they were in some way affiliated with the daycare when they weren’t—but the case never actually went to court. Most artists and private collectors aren’t going to challenge big wigs anyway, but honestly, there’s no saying where the verdict would’ve gone (since it was 1989 and it seems that a lot of go-to court cases about derivative works happened later, especially thanks to the Internet).
I imagine that the reason fanart sale goes largely unpunished is that international copyright law is another kettle of fish entirely, and in most cases, taking someone to court over selling a few prints at conventions would cost more money than the copyright holder could’ve lost from that artist in the first place. The anime/manga/comics industry isn’t hurt by a few artists selling badges and prints—they’re going to be hurt by people actually bootlegging their DVDs and using official art and blowing it up on posters and selling them all over the country, and those hilariously unattractive toys and art sets that you sometimes get in dollar stores that’re mass-produced in China and just barely look enough like official merch that the completely untrained eye can’t tell the difference.
And bringing this back to recasts—recasts are a direct copy of a company’s work. They don’t serve any purpose that the official merchandise isn’t meant to serve. In many cases, they’re outwardly almost identical. People buy recasts (often) in lieu of official dolls, rather than in addition to official work. This makes them functionally different from fanart vs official work, because they do directly impact the company’s potential sales. (Recasts of discontinued or limited dolls still impact the company’s potential future sales, because the company can still rerelease those sculpts or change resin colors.)
tl;dr recasts ≠ fanart
(Syrimoon I’m sorry I tl;dr’d on your post! orz)