TIME is literally running out for this year's Fringe. Tomorrow the door to this year's Edinburgh Festival Fringe programme slams shut, and its director, Jon Morgan, and his staff start the process of putting together the ingredients of the biggest arts festival in the world, ready for its launch in June.

But for some, time is also running out for the Fringe as we know it. In pure statistical terms, the festival - the annual jamboree of comedy, theatre, dance, madcap shows, shoestring productions, street theatre and street buzz - is in rude health. Last year was a banner year - 1.6 million tickets were sold, smashing all arts festival records.

As the Greeks knew, after hubris, there comes nemesis.

Only a few weeks ago the big four venues of the Fringe - the Assembly, The Pleasance, Gilded Balloon and Underbelly - kicked off what is likely to be the biggest story of this year's Fringe, the 62nd, by announcing their own new comedy festival.

One senior figure on the Fringe told The Herald it could be "a disaster" and "the end of the Fringe as we know it". Yet another has said that "we are in danger of killing the goose that lays the golden egg".

The Comedy Festival, as it stands now, is essentially a marketing exercise - the big four pooling their comedy act listings into a single brochure, and, most importantly, trying to attract sponsorship to the tune of £1m.

They launched their idea with a document which said that any potential sponsor of the Comedy Festival can expect to reach an audience of more than a million people in the UK and 750 million worldwide, an "unprecedented opportunity to benefit from an association with a world-class event from inception".

For this sponsorship, the title sponsor would have to pay around £650,000. This is currently, sources say, in the process of being "signed and sealed". The secondary sponsors will cough up around £150,000 and a lower rung of sponsors might have to pay £75,000 each.

The programme, which will have a 400,000 print run, will be launched, as with the official Fringe programme, in early June.

Over the years the big four venues have become big for a reason - they have sold a lot of tickets, and brought talents such as French and Saunders, Graham Norton, Eddie Izzard, Lee Evans, Russell Brand and Jimmy Carr to the capital.

With the announcement of the new festival, it appeared to many that these big venues are declaring independence from the Fringe, forsaking the glorious mess of the old institution for new, corporate, highly commercialised sunlit uplands.

Eyebrows may have also been raised when William Burdett-Coutts, director of the Assembly, said the move will give "comedy the platform it deserves".

Comedy already accounts for 30% of the Fringe programme and, for many, the Fringe has been overly dominated by stand-ups for years. Others felt the big four were both having and eating their cake: they are not withdrawing - yet - from the Fringe programme, despite their shiny new Festival.

"It is a break away, whatever they say, and I think it would be a disaster for the Fringe. The supervenues' have changed the Fringe radically and it looks like they are going to change it again," one key figure of the Fringe said.

Nica Burns, who for years has run the premiere comedy award of the Fringe, now called the if.comedy awards, wants to see how the festival develops in the longer term before speaking at length publicly, but she did say: "Any proper breakaway would not be a good development in my view.

"I would be very sorry if every comedy show at the Fringe was not in the main programme. It would not be good for the public and not be good for the comedy shows themselves.

"If this is just a way of marketing for the four venues, then fine, but if it turns into more than that, then that would be a great shame in the context of the Fringe as a whole."

There are other voices warning against the move. Tommy Shepherd, director of The Stand comedy venue, has criticised the idea, and Harley Kemp, director of C Venues, has said the new programme will prove confusing for visitors to Edinburgh in the summer. He added that "non-comedy will be relegated at those venues behind the sheer weight of a combined stand up programme".

Perhaps it is surprising, therefore, that Jon Morgan, the director of the Fringe, is publicly sanguine about the new Comedy Festival. His argument is twofold: firstly that such entrepreneurial spirit is part and parcel of the Fringe, and always have been. Secondly, the need for the big four venues to club together in such a way to raise capital points to what he calls the "fragile economies" of the Fringe.

There were 31,000 performances of 2000 shows in 250 venues last year. But those shows exist financially "on a knife edge", Morgan says. Companies fold and performances are cancelled every year.

"This whole issue flags up the fact that the Fringe as a whole is hardly subsidised at all, the subsidy per performance is minuscule really," he says.

"Because of that, venues are raising money where they can. The cost of running a venue, and a show is rising: accommodation, licences, none of these are going down. A lot of the planning is highly marginal - often the management of a Fringe venue or show is on a knife edge of happening or not happening.

"So I totally understand why they want to do this. We have met with them and all agree they should be part of the Fringe and they still are. It is not my role to tell venues how to run their businesses."

Anthony Alderson, the director of the Pleasance, says that the Fringe has nothing to fear.

"It is exactly like the kind of collaboration we have done in the past. We do not want to be separate from the Fringe, just give comedy its own platform. It's still part of the Fringe, just like the music festival T on the Fringe is part of the Fringe," he says.

"We are not declaring independence from the Fringe, we would be fools to do that, it would not make sense for us to part from the Fringe."

Alderson says that no major sponsorship has yet been signed for the new Comedy Festival. "We're waiting to see," he says. "I hope we have partnership already set up and we are in discussions with a number of people. We need to find a way to make it work, and if we even raise £500,000 in this first year, we will have done a great job."

It will probably be 2009 before the new Comedy Festival - sponsor in tow - truly establishes itself on the Fringe, and by then Jon Morgan will have a real headache to negotiate: the new UK visa laws which come into play this autumn, spelling additional cost and hassle to the many foreign artists who come to Edinburgh every year.

He has "real concerns" over the impact of compulsory biometric visas, £99 visa costs, and the £400 cost of being an official "sponsor" of touring artists. That issue, one suspects, will be another, and potentially far more damaging, chapter in the ongoing drama of the Fringe.