Why is Wizards of the Coast Scared?

There have been a slew of blog and forum posts over the last week about the new Wizards of the Coast fansite kit, and I can't claim to have read them all, so if I'm repeating someone, I apologize ahead of time and I promise not to waste too much of my readers' time by making this fairly short and to the point.

When I read through a fansite policy that is as restrictive as the one in question, it just screams fear and lack of confidence to me, and the only thing I can attribute this to is the threat of competition hurting the sales of their products. Are they really scared of the competition that fansites will generate? Seriously, there really are only three types of bloggers out there who write about D&D:

1. People like me who write because they enjoy the mental exercise, but for the most part only write for small audiences (sometimes just ourselves!). Most, if not all, of what we produce is not high enough quality to compete with a full staff of employees hand-crafted to create quality products. WotC, you have nothing to fear from guys like me.
2. People who write quality stuff for niche genres. These people are passionate about their little corners of the hobby and sometimes produce stellar products, but let's face it. Their ideas just aren't appealing enough to the masses for them to steal any real business. You wouldn't produce the products these guys write because they wouldn't sell well enough, so why bother with them?
3. People who write and produce quality work that appeals to a large group of potential customers. This is a very small minority on the internet, but they might end up being competition. The tough part is recognizing when there is an asset to your company out there that you would be stupid not to recruit. If there is someone on a fansite who is producing better material than what you are paying your employees to produce, wouldn't it be stupid not to recruit them? If WotC loses money because they have hired people who can't produce a better quality product than a fansite can produce, they can blame no one but themselves.

With those three categories of competition (if you can call it that), I really don't understand the restrictive nature of the fansite policy. To be such a powerhouse in the industry, one would think that they would encourage gamers to publish their adventures, NPCs, and encounters from their own personal campaigns. This move just feels more like a selfish child with his favorite toy more than a company that is confident in their ability to produce better quality work than their own fans.

Personally, I've pretty much stopped playing 4E for the moment in favor of D20 Modern and D&D 3.5 (put together, no less). Does that mean I won't ever pick it back up? No, but if I ever actually got one of those C&D letters for posting one of my NPC Spotlights, it would be all over for me. That's my line in the sand, Wizards. Your current product isn't so much better than Pathfinder (or just plain old 3.5, for that matter) that I'd feel the need to cling to it.


Note: For the best article I've read about this so far, check out The Seven-Sided Die's response. Also, while internet petitions have always seemed useless to me in the past, here's a link to one protesting this new policy: http://www.petitiononline.com/2d6plus8/petition.html.