I don't know what JHW meant by that, but the days when the Fringe needed the official Festival in any way are decades in the past.

The point of the comparison with Edinburgh: for local businesses, a fringe sells your product (like beer or bed space) on top of the official festival. In Edinburgh the fringe is vastly more important than the official Festival for the tourist industry: in Whitby it's very small, but since official WFW isn't interested in diversifying what it does, there is a lot of room for expansion.