The comments on Harry Potter as steampunk and a trawl through the crosslinks off Draco in Leather Pants got me to thinking about the fanfiction phenomenon. If you go looking, there's fanfic about just about everything, and it usually invokes Rule 34 somewhere. If you take a trawl through any fanfiction archive, you'll quickly discover there's a huge range of the stuff, ranging from the utterly abysmal right through to brilliant - and they're pre-sorted for you.
Some sites have ratings systems, including tags to indicate what the story is about (do not ever open anything tagged with 'slash', 'NSFW', or 'shipper' unless you're certain no-one is going to look over your shoulder and embarrass the heck out of you), a movie-like G/PG/M/R ranking, and sometimes some version of the 0 through 5 star system as well. What happens then is that the stories live or die on their ratings, rankings, and the number of comments they get. Stories with a lot of comments tend to get more interest over a longer period of time but will quickly "bubble up" to the top of any listing simply because in the fanfiction sites based on forum software, the default is to display by most recent comment. Crosslinkage helps too - comments telling readers "if you liked this, you'll love X" complete with a helpful link to that story.
Oddly, the most commented stories are either the best or the worst - the mediocre offerings are lost in the noise. The worst are often hilariously bad rather than merely dismal, testament perhaps to humanity's love of a disaster happening to someone else. Equally entertaining, the best pieces are often better than the originals, not least because one thing many fanficcers do is try to clean up or work around the continuity issues of the original. It's positively amazing that people have managed to produce coherent, sensible reasons for much of Star Trek's (all of them) characterization, plots, gimmicks, and other oddities.
Some of my favorites include the Naked Quidditch Match (which, despite the title, is actually safe for work unless there's a problem with laughing yourself sick at work), the Sith Academy series which pits Darth Maul against the horrors of everyday bureaucracy and the insufferably perky Obi-Wan Kenobi, and of course Cassie Claire's classic Lord of the Rings Secret Diaries. I also cherish a not-so-secret fondness for Austen fanfic (the respectable fanfic...)
Why mention fanfic at all?
First, it's an example of a self-sorting open market - every story competes on its merits or lack thereof. The readers are the ones who decide which stories rise to prominence and which fall. Oh, and there's a niche for everything you could possibly imagine and rather a lot of things you'd prefer not to.
Second, fanfiction is an ancient art form that's largely ignored and condemned today because of insane copyright rules. Quick questions - how many retellings of Cinderella are there? How many Star Trek novelizations? Dr Who novelizations? Yep, fanfic. Paid fanfic in this case.
Third, fanfiction is a valuable sandbox for budding, blooming, and even overblown writers to hone their craft toolbox. It's an area where you can experiment with new techniques and have their effectiveness judged by the most impartial audience - people who want to read about characters and worlds they love. They don't care who you are or how many books you've written or how many copies you've sold. They care that you write stories they like.
Fourth, it keeps you as an author in contact with your readers. Real contact, because they're on those boards demanding more if you start a story and fail to finish it, getting irritated if you do something they don't think is right for that character, and generally being people. There aren't many places in the publishing industry that do that - if you go wrong, you'll know.
There are fanfiction sites that take subscriptions, others that are funded by donations, and still others by advertising, as well as the ones that run on someone's love and devotion. All of them have something to offer writers and readers.
So what can the publishing industry learn from fanfiction?