We used to have this conversation about plain old plagiarism. Back in the 1990s I discovered a couple people who were stealing my content and reposting it on their own sites and pretending they wrote it. Sometimes these were sites involving crude early forms of monetization, but sometimes there was no financial incentive.
I found this baffling. What, I thought, was the point of plagiarism in the absence of material benefit? How can you enjoy your stolen kudos, knowing you didn't actually write the thing people are praising?
I wonder now if for them, they thought of the stealing itself as a form of labor which entitled them somehow to those kudos. Because that's what's going on with AI written fic, only more indirectly. It's still plagiarism, because all AI writing is plagiarism; it can only do what it does because it's capable of stealing from 100,000,000,000 texts instead of just cutting and pasting from one or half a dozen. But because you have to design the prompt yourself, it creates the illusion that the product is your "work."
Anyway. I was having a conversation not long ago with @shdwsilk about this very question: what will AI do to fanfic? Because although I would assume that most writers see a major difference between writing your own story and telling a chatbot how to extrude one for you, I do wonder if there is a subset of readers out there who will cease to care about the distinction, and who will accept AI written stories if it means they can get more of their favorite content faster.
But I think this is actually the key thing pointed out in the conversation above: the whole idea of fiction as "content" is what got us here in the first place. Writing is valuable to me as a means through which human beings try to help each other understand the human condition. This is what fiction, IMHO, is supposed to do. This is as true for fanfiction as it is for Literature with a capital L.
From the point of view of monetization, however, it doesn't matter what the Content does or how it was generated as long as you can sell it. This is as true for film studios as it is for the people out there sending AI generated short stories to Clarkesworld. I think a lot of producers would be happy to make films based on AI generated scripts, provided people would watch them. In a way, they have always been trying to approximate this situation by constantly recombining whatever they think are the most profitable narrative elements of the most successful blockbuster movies.
In 1984, George Orwell incorporates this running gag about how Julia works in the Fiction Department--as a mechanic. Fiction is now written by machines which recombine the same six plots; humans are involved on the writing process only when the machine gets out of order. He was envisioning this as an aspect of Stalinist totalitarianism, but like so many things about 1984, it now functions as a description of life under unopposed capitalism.
I find all this infinitely depressing. How long will people persist in the quixotic business of attempting to use language to communicate with other humans? How long do we have before people just stop expecting or even seeking meaning from their fiction? How long do we have before writing has been fully mechanized--created by machines and directed toward other machines, with humans included in the chain only because they are the point at which the cash is infused?
Sorry. Anyway. Maybe fanfiction, because it is not monetized, because it is about community and human connection, will be an important site of resistance. Maybe fanfiction, because there is such constant demand for more and faster fiction, will be captured by AI generation. Most likely both things will happen. Which would mean among other things that intra fandom conflict will become much more high stakes, so, let us all brace ourselves, I guess.