Steady up, Jack!
The festival will only be responsible for those events, wherever they take place, that can be stewarded, programmed and they can shake a doanations box or charge an entrance fee. The Fringe events are organised by others on an ad-hoc arrangement in conjunction with the landlords of the pubs. There's plenty of room for both. Where it is a pub or club that is involved it is entirely up to the landlords to what extent they want to be involved. If they are not willing to allow a ticketed/stewarded event, but will allow a fringe event, that is entirely their prerogative and not that of the festival organisers. I know many of the festival organisers personally from the 60s up to the present day. None of them live in Whitby, and never have to the best of my knowledge, but they give up their free time once one year's festival is finished to go round all the venues asking if they are available for next year and check for problems from previous years. I don't always agree with what they do but I certainly have the utmost respect for what they do and have done.