Now before you get all excited, it's only Alloy Entertainment allowing this so far, and only for certain properties (Gossip Girl, Vampire Diaries, and Pretty Little Liars). No doubt more publishers and intellectual properties will become available, but it's not like Amazon has just declared open season for publishing fan fiction.
Lots of professional authors have already weighed in: John Scalzi is preliminarily wary. Jim C. Hines is pondering it. Malinda Lo is freaking out.
So, a few things to keep in mind.
First of all: the properties made available so far are already what are called "packaged works": they're basically work-for-hire product. It's not like Amazon is (or could) throwing the gates open for you to start publishing Harry Potter or Lord of the Rings fanfic. Only the IP holder (i.e., the author) can allow that.
I am guessing that a few authors will give permission, and the majority will say "Hell, no."
Now, of course some people fear what Amazon's long game is. Amazon has a history of undercutting and commoditizing things in order to seize market share, so I've seen speculation that Amazon will start requiring authors to agree to a "fan fiction clause" in work published by Amazon, and that this will slowly exert pressure on all publishers to bow to this new model.
I think that's pretty unlikely, because I think it's pretty unlikely that this "commercial fan fic" will ever become a big thing.
What I do think will happen is that there will be a handful of success stories, ala Fifty Shades of Gray. Amongst the vast sea of crap that will be published, much like self-published original fiction now, a few will become enormously popular bestsellers, probably for reasons as inexplicable to most of us as 50SoG.
And the catch there is that Kindle World's contract grants the original license holder all rights to use your creations, without compensation.
In other words, let's say I was able to publish my Alexandra Quick series on Kindle Worlds (which I can't, because J.K. Rowling and Scholastic have not jumped on this bandwagon and I think it's enormously unlikely that they will). And let's say Alexandra Quick became the hottest thing since 50SoG. (Hey, I can dream, can't I?) Under the terms of Kindle Worlds, Amazon Publishing could sell the rights to Warner Brothers to make a series of Alexandra Quick movies, and no one has to pay me one thin dime. I get paid only for my novels, not for any derivative works. At all. I don't really own my characters.
And, the thing is, I think that's fair, more or less. Because I already don't own my characters. Because it's fan fiction. If I want to write Alexandra Quick novels that I can hypothetically sell the movie rights to, then I'd need to "file the serial numbers off" and write them as original novels, not as officially sanctioned fan fiction. If you decide to jump into the Kindle Worlds fan fiction pool, you do so knowing that you are writing fan fiction and you don't own it. Don't like it? Write something that's not fan fiction.
The other big objection I've seen to this is that it violates the "gift economy" culture of fandom. I.e., it's just plain wrong to sell fan fiction, because it's wrong because.
As far as I'm concerned, if you've been given the creator's blessing, it's not wrong.
Will this see a bunch of people no longer posting free stories on fanfiction.net because they're trying to sell it on Kindle Worlds instead? Oh, I'm sure some will try. Keeping in mind that it's only ever going to be a very small subset of properties that are allowed on Kindle Worlds (and I do not think that subset will ever include Harry Potter, Twilight, Lord of the Rings, Star Wars, Star Trek, anything Marvel or DC, you get the idea), even among those fandoms, plenty of people will still write stuff for free. There will never be a shortage of free fan fiction. And the vast majority of authors who try to sell their fan fiction will be horribly disappointed if they're thinking they're going to make any significant amount of money at it.
Alexandra Quick as commercial fan fic?
See above for all the reasons why this will not happen. But hypothetically, let's say J.K. Rowling shocked the world by saying "Sure, go ahead and sell your Harry Potter fan fiction."
Would I do it?
Not to make money (Amazon decides the pricing, and I wouldn't expect to see significant sales, especially since all the AQ novels are already available for free), but for the increased exposure, to give Alexandra Quick a much wider audience. (And yes, taking the risk that someday Alexandra Quick might become a blockbuster movie franchise and I wouldn't get paid. Hey, I would happily take that risk! :D)
I would put all the AQ novels up for free on Amazon and Smashwords now, if it were legal. I imagine most fan fiction writers would. And if that led to people saying "Hey, this Inverarity is a pretty good writer, maybe I should buy his original fiction..." Well, I'm sure that's the thinking of a lot of writers who will be flooding into Kindle Worlds.
I will not, however, be writing any Vampire Diaries fan fiction.
What do you think of the Kindle Worlds program?