With a record 2,050 shows this year, The Edinburgh Fringe has become so big, it's impossible for one person to see even 10 per cent of it. What started modestly in 1947 as a response to the International Festival is now a thundering juggernaut.

While there are still many great shows, on offer there is a growing sense that there's something rotten in the state of Edinburgh - that all the focus on a single city for a single month of the year is having a detrimental effect on comedy, which accounts for 621 of those shows.

The Fringe's new director, Jon Morgan, faces a major challenge: make the Fringe smaller, not bigger. His predecessor, Paul Gudgin, did a great job raising the Fringe's profile; in the process it has become a victim of its own success.

The fierce competition for crowds tends to work to the detriment of new talent. The Fringe may have kickstarted careers in the past - Steve Coogan, Lee Evans and Frank Skinner, who returns this year - but for most hopefuls, the rising costs simply thump their bank balance.

An average show might cost up to £10,000 to produce and even a sold-out venture can struggle to break even. It might be less bother to stay in London and spend August putting fivers through a shredder.

There are acts that make a profit, but it tends to be the privilege of the established stars, such as Jimmy Carr wisecracking at the International Conference Centre or Ricky Gervais performing to a Fringe record 8,000 people at the Castle. Their presence will divert ticket-buyers who might have gone to a smaller venue and discovered a new star in the making.

The clamour to be noticed has a detrimental effect on standards, too. Comedians are an attention-seeking bunch at the best of times and the sheer numbers at Edinburgh force performers, with the few exceptions of Daniel Kitson, Stewart Lee and a handful of others, to adopt shock tactics to put bums on seats.

Every year another taboo has to be broken. Scott Capurro went for the Holocaust, others have been accused of blasphemy, anti-Semitism or trivialising rape. Race is always a good publicity gambit, too. This year Aussie Brendon Burns has blacked up and dressed as a Zulu in the advert for his show, So I Suppose This Is Offensive Now.

The format itself can stifle creativity, forcing acts to focus on the short-game. Rather than let a style evolve organically, the traditional one-hour slots oblige comedians to shoehorn their act into a formulaic 60-minute package - which is hardly conducive to groundbreaking ideas.

Further damage is caused by the obsession with awards. There were 24 at the last count, topped by the if.comeddies (formerly known as the Perrier), awarded on 25 August.

Ambitious stand-ups are always trying to second-guess the judges. If comedians can get the gongs out of their heads, it is probably because they are thinking about that elusive television deal. The presence of visiting TV executives who don't usually do the rounds of comedy clubs inspires character comedians to impersonate chavs, doctors, or other telly-friendly comedy archetypes: not so much shows as living showreels.

Happily, there are a few alternative currents. Edinburgh veteran Peter Buckley Hill founded the Edinburgh Free Fringe in 1996 - which started as a bolthole for eccentrics and has now become hugely popular. Performers do not have to worry about renting pub rooms - as they play for free, they often attract large crowds and the bar takings keep the management happy. This, at least, has gone some way to recapturing the original spirit of the Fringe.

Back in north London, another alternative is stirring. Producers Michelle Flower and Zena Barrie have launched the Camden Fringe for acts that have decided to give their overdraft time off, or acts too new for Edinburgh. Radio 4 regular Chris Neill is one of the seasoned performers appearing in London and has summed up Camden Fringe's ethos in the title of his company - Not Wanting to Lose a Wad in Edinburgh Productions.

Michelle Flower decided to stay in London after having difficulties tempting audiences away from the main venues. "It didn't feel like the Fringe any more, it was just a trade fair," says Flower.

The message is clear: organisers beware. Edinburgh is still the best arts festival in the world - but it will take careful planning to keep it that way.