By 2032, Fanfiction Will Become a Billion-Dollar Market

Fanfiction – fictional stories written by fans based on existing works such as books, tv series, movies etc., using copyrighted characters, settings, or other intellectual property owned by another author¹ – is not a new phenomenon. Proof of the human desire to retell existing tales of existing characters goes back almost to the origins of human language via folklore stories. In these earlier times, retelling stories was the norm, and retellers could benefit from their creations. For example, Shakespeare himself did not own the stories in his plays, he was commissioned by a patron to retell a tale and he received royalties for the work. This dynamic changed when legal authorship, the legal ownership of original works, was established in the 18^th century via copyright and intellectual property laws. Copyright law defined and separated the professional author, the copyright owner of original texts, who could be paid for the work, from the rest of the population, the fans.² This separation and the restriction that only copyright owners are allowed to receive monetary benefit from the copyrighted material created a contentious relationship between original authors and their fans, who were building thriving communities around their shared love of characters and fictional worlds. For example, Daniel Defoe famously declared that his work was kidnapped by amateur writers who reduced the value of his creations with inferior impersonations.³ In more recent times, multiple famous authors such as George R.R. Martin (Game of Thrones), Anne Rice (Interview with the Vampire) and J.K. Rowling (Harry Potter) expressed negative views of fanfiction, with Rowling even suing a fan for attempting to publish a work describing an alternative future scenario based on the Harry Potter world.⁴

However, the disapproval of original authors has not curbed fans’ desire to read and write fanfiction. Archive of Our Own (AO3), one of the largest fanfiction archives maintained by the non-profit Organization for Transformative Works, stored 7 million fan works⁵ over 36,700 fandoms (fictional worlds such as Harry Potter, Star Trek, Lord of the Rings) and had 3 million registered users in 2020.⁶ They were also adding new works at a staggering rate. In April 2020, fans added more than 4,500 new fanfictions per day, up from around 3,500 the year before.⁷ Fanfictions range from short stories to novel series that take their authors years to write. Demand for fanfiction has been growing at an even higher rate. In April 2020, AO3 daily page views averaged 48.2 million, with readers leaving around 700,000 kudos (likes) and 100,000 comments per day.⁸ And AO3 is far from the only website that stores fanfiction, there are hundreds more e.g. fanfiction.net, Livejournal, Wattpad, Tumblr in hundreds of languages across the world. However, because of existing copyright laws, this flourishing community and existing demand and supply of fanfiction have largely gone unmonetized. While there are exceptions, such as the Fifty Shades series by E.L. James that famously started out as a Twilight fanfiction and was later published as an original work (stripped of Twilight references), earning the author more than $150 million⁹; in most cases, neither the original author nor the fan author benefit from fanfiction.

I believe that non-fungible tokens (NFTs) have the potential to change this adverse dynamic between original authors (and publishing houses) and their fans, and allow both original authors and fanfiction writers to receive benefit for their work. While there are no existing solutions yet that have resolved this issue, there are multiple ways NFTs could change the incentives of the participants. One way would be for original authors to mint their original characters, settings, worlds, and other intellectual property as NFTs. These NFTs could be used freely by fans to generate fan works and allow original authors to receive 5-10% of any revenue earned by fan authors on the fanfiction. Fan writers could post their work to be read for free (as is the norm today), however they could also create NFTs related to their work on the blockchain that their readers could buy to support them. These NFTs could have different utilities: they could allow NFT holders to vote on what happens next in the story, ask for alternative endings, get exclusive story-related merchandise, allow the NFT holders to meet the fanfiction writer, attend meet-ups etc. If the fanfiction was later published, NFT holders could receive a percentage of the royalties earned by the work as well.

Current art-based NFTs create big division among artists. For example, popular NFTs such as Bored Apes create a frenzy and multiply their value through trading (from which the original artist only gets a percentage). Only established artists with multiple viral works can set their initial prices higher (to capture more of the value), unknown artists often stand to earn nothing because their NFTs’ utility depends on demand for a scarce item.

However, fanfiction NFT’s utility would not depend on scarcity, fanfiction writers could issue unlimited NFTs and not depend on having substantial demand for the NFT to increase its price and be traded/sold. So even new authors of new works, if only one person liked their story, could sell an NFT to this one supporter to benefit from their work, which creates a more equitable distribution of value that depends on the quality of the fanfiction.

To take this one step further, this NFT mechanism could be used not just for fanfiction but original works as well, which would fundamentally change the publishing industry. Publishing houses historically acted as middlemen and selected authors to be published because their resources were needed to (1) distribute the work and (2) ensure that the legitimate author was receiving benefit for the work by paying the author for sales of books and (3) enforcing copyright claims (against people who copy work maliciously and fans). While authors today can self- publish and forego this first use, they still need the middleman to establish their own legitimacy and enforce copyrights. For example, in a similar mechanism to the NFT described above, new authors could self-publish, distribute their work for free and get donations via e.g. Patreon to monetize their work. However, anyone could just copy this work, set up their own account on Patreon and collect money from readers. Recording their work on the blockchain would immediately establish that they are the legitimate author and allow them to benefit from it. Plus, with the mechanism described above with fanfiction, NFTs would change the dynamic from persecuting copyright infringement to encouraging use of copyrighted materials, making the third use of publishers null. Therefore, NFTs could democratize writing, from the current status quo of a few authors selected by publishing houses earning money for writing to anyone who wants to write benefiting from their work. While it’s unlikely that publishing houses would disappear completely by 2032, it is likely that we will see a higher percentage of original works created and monetized independently.

Of course, to make this happen, all stakeholders must be willing to adapt to the changes. Original authors must accept fanfiction being written using their characters and world. While NFTs change their economic incentives, they do not change pride or ego that might still cause original authors to shun fan works. Publishing houses, fearing the loss of their usefulness, could stop their current authors from creating NFTs of their work, though the increase of economic gain from creating value from fanfictions might be enough to offset this fear. Regulators must adapt copyright laws and enforcement practices to adapt to new ways in which intellectual property could be used and distributed, to allow fans to use copyrighted characters and settings and legally earn money from using them. Blockchain technology must improve to enable this use case efficiently, an interface must be created that allows authors to mint NFTs, fan writers to use these NFTs and mint their own fanfiction and NFTs, readers to read fanfiction and buy NFTs, participate in the community etc. Finally, the community must have effective governance to decide for example on sensitive content to make sure reading and writing fanfiction is safe. (Labelling system, moderation etc. already exist in the fandom.)

Overall, I believe that it is very likely that NFTs will allow original authors to benefit from the use of their work and fan writers to earn money on something that has been a hobby so far, thereby creating a billion-dollar market by 2032 that has not existed before. NFTs will also change the negative dynamic between authors and their fans, take away the stigma of creating fan work, encourage creative writing and the proliferation of active fan communities. Supply and demand of fanfiction has existed and grown tremendously even in the face of disincentives, NFTs have a chance to remove this friction and encourage and reward people for their imagination.

Sources

¹ Ewan Morrison, “In the beginning, there was fan fiction: from the four gospels to Fifty Shades”, The Guardian, August 13, 2012, [https://www.theguardian.com/books/2012/aug/13/fan-fiction-fifty-shades-grey]

² Ibid.

³ Ibid.

⁴ “Professional Author Fanfic Policies”, Fanlore, March 29, 2022,[https://fanlore.org/wiki/Professional_Author_Fanfic_Policies]

⁵ Kirsten Wright, “The Archive of Our Own Reaches Seven Million Fanworks!”, Transformativeworks.org, December 31, 2020, [https://www.transformativeworks.org/the-archive-of-our-own-reaches-seven-million-fanworks/]

⁶ “AO3 Statistics 2020: A Look Behind the Scenes”, Archive of Our Own, May 9, 2020 [https://archiveofourown.org/admin_posts/15931#.

⁷ Ibid.

⁸ Ibid.

⁹ “Annual earnings of Erika Leonard (E.L. James) from June 2012 to June 2018”, Statista, December 2018, https://www.statista.com/statistics/321670/e-l-james-earnings/

Livia Kathi

Livia Kathi is a self-proclaimed geek and nerd, who spent much of her youth reading and writing fanfiction (so she might not be unbiased writing this piece). She strongly believes that new technologies coupled with the right incentives and business models can improve the world. Coincidentally, her biggest goal in life is to build things that improve people's lives and make people happy.

This author does not have any more posts.