From an interview at io9.com on the future of books in an increasingly digital world:
io9: Will new online formats change the format of the novel?
PNH: I have a severe Google Reader habit. I think people will use blog forms and twitter to contrive fiction. Here's an interesting thing online: The explosion of fanfic. I don't read much, but back in fandom 1.0 - zines - there were people writing Star Trek stories, but it was below the salt socially. There was a strong aversion to publishing amateur fiction because people felt that if it were any good it would get published professionally. If you were seeing an amateur SF story, it was partly an admission that it was crap and couldn't get published.
But with fanfic, there's no ceiling on how great it can be because it's unlicensed and can't get published. It's often written far better than the stuff it's based on.
I wish [fanfic could go legit]. For most of human history, remixing narratives in circulation has been how culture worked. I believe in compensating artists, but yesterday [on a panel at WorldCon] the "moral rights" thing came up, and I think that's horseshit. I think artists should be treated well and so should waitresses and plumbers. Artists shouldn't have "treat them extra nice" rules. People experience art socially. People say "Watch this! Read this!" We experience art and we want to talk about it. I know that there are writers horrified by fanfic. Jo Walton hates fanfic. But in general I think with TV and the mass media world, somebody is going to figure out a way to encourage [fanfic] in a way that makes them a pile of money.