I don't think that's true at all. An IP could be badly damaged by the creation of a poor mod.
This is about the artist's right to control how their work is used. To my mind the money is a side issue, though it is the driving force behind large companies denying permission to use their IP. If that company down the track tries to create their own "mod" and sell it, their ability to make money on it may be compromised by the existence of a freely-available community mod using their IP.
Why buy the cow when you can get the milk for free.
I believe that good games and gameplay should stand independent of their genre, fictional setting, story, etc. Mod makers should focus on gameplay rather than recreating their favourite character from another game. After all, gameplay mechanics can't be copyrighted, right?
IrritAnt01
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